Saturday, April 5, 2014, AM | 1 Comment
The path of a Forex trader can be riddled with many a difficult and life altering decisions. Alright, that might be a bit of an Exaggeration, but the decisions you take as a Forex trader can have long lasting impact on your finances, reputation as a trader etc.; so naturally any decision you make in this field has to be weighed appropriately with all pros and cons in mind with proper awareness of all important indicators affecting the trade.
However, getting the hang of all these and develop an innate sense of foolproof trading might take years for any trader, because practice and experience teach us any lesson the best.
Nonetheless, you can cut your losses short and make some notable profits, even in your beginner phase.
Following are three key steps which can help you trade successfully in foreign exchange:
The right mindset and experience
One of the fundamental mistakes beginners make in Forex trading is treating it as get rich quick scheme. What is most important in this field is preserving your capital rather than making profits fast, so don’t plunge in head first with all your capital as this might lead to you making unrecoverable losses.
Rather set up a demo account first. Practicing on a demo account with virtual money and simulated market atmosphere helps you get the much needed experience and developing a systematic and consistent trading style, and most importantly confidence in your decisions.
Even seasoned traders go back to demo accounts from time to time when they have hit a dry spell. Demo accounts from reputed sources have a solid Web Presence and IT (Web design) presence today, so it is rather easy for a beginner trader to find a trustworthy one today.
Another way to increase your chances of success from your experience is by maintaining a journal of all your actions and their consequences.
Review these on a monthly basis in the least; this will help you further consolidate a stable trading style.
How to treat news data
The very name foreign exchange implies the nature of the trade, i.e. trading in foreign currencies, and as any currency is affected by a number of national and international events, a trader has to be on top of all news about such events.
However, how do you deal with such news? When do you act on them? These are the most confusing parts of the game.
Often traders make their own deductions about the effect certain important socioeconomic events will have on the market and take a course of action presuming a certain result.
But the market is rarely that predictable, and in such a situation a trader who acts ahead of time, risks to lose the most.
In fact, acting immediately after a news headline that turns the market into a volatile place is also not a good idea. The traders need to wait out their time and act only after a definitive trend has developed in the market.
As mentioned above, currency of any land depends on a large number of national and international factors; the more important the currency, the larger your trading base, the more indicators you have to be aware of.
A Forex trader might often find himself overwhelmed by the amount of data he has to deal with and this more than often leads to a costly oversight resulting in irreparable damages.
One of the best solutions to the current technological revolution has thrown up to make the lives of Forex traders easy is the option of Automated trading.
In automated trading, computers work ceaselessly and can deal accurately with an endless base of data, in a very short time. They also cut down the role emotions play thus raising the play of logic in our decisions by many times.
Thus automated trading saves you both time and money, thereby helping you succeed more than you would have on your own. Such tools are seeing widespread Web Presence and IT (Web design) development today.
From foreign exchange to adverstising agency – all are taking advantage of it.
These steps will help a forex trader, no matter how much time he has spent in the business, and help her/him hit a higher success rate.
Sam Payn is a leading financial blogger. From online finance forms to leading blogs – he writes for them all.