It is true to state that the forex market is the biggest market in the world by volume. There are millions of trades being made on the forex market on daily basis. There are many factors that influence the price action of any currency and as such so single person can accurately predict what will happen next on the market. This makes forex trading a bit risky since there is no assurance that any position a trader might take will be the right one to give him profit. Some might consider this a gamble especially the newbie traders. Nevertheless, forex trading can be a gamble if you let it. Regardless of the fact that no one knows what will happen next on the market accurately, one can still make an educative guess based on either one of the methods of analysis of the market. Which are the technical and fundamental methods of analysis?
With these methods, lots of traders are making millions on the forex market. And so can you. Its hard enough to trade on the market even with the right trading style and analysis because of the simple fact that no one can predict the future on the market let alone to be reckless and lose money. There are many traders who have lost huge sums of money because of some decisions they made. And these could have easily been prevented. This article is dedicated to traders who want to recover their lost money and learn to trade the forex market, traders who are new in the forex world and most importantly traders who want to improve upon their trading knowledge. Below are some safe forex trading methods.
How to make money in forex currency trading
There are many ways to make money in the forex market. Below are some of the best options that need to be considered by every trader.
You need to do your homework
Why do forex traders lose money? Many are the reasons why forex traders lose money. The most prominent is the lack of education. Forex traders need to educate themselves on how best to trade just like everything in this life, it is always best to prepare first before attempting to do something new and the forex market is no different. You want to be a good trader and yet you do not do research about the geopolitical and economic factors affecting a currency? Traders who do not research are turning forex trading into a risky gambling. You need to make the painstaking effort to learn about forex trading.
There are so many factors that influence the price action of currencies. Among them are inflation rates, political instability in a country which includes conflicts and elections. The outcome of all these factors can’t be foreseen. Learnmarketonline has a vast collection of educational material on diverse topics in forex trading. Discover a trading style that works for you and stick to it. For every trade you make, you need to make research on the currency and the country issuing the currency. So when you make research before trading, you save yourself from losing money due to preventable mistakes.
Make enough research when choosing your broker
This should be the priority of any serious trader. Trading with a trustworthy and efficient broker is of extreme importance. It is true to state that there are many brokers out there who are scamming traders of their hard earned money. Before you choose a broker, make sure their offers are in alignment with your trading goals. Secondly, check to make sure the broker is licensed to operate. This is important because it will protect you from being cheated by brokers. Should there come a time where you feel you are getting less than you deserve from the firm, you can always report them to the financial regulatory board in your country. Also, you can always get your current trading account money back in case the firm goes bankrupt when the broker is a member of customer’s investment protection organization.
Practice on demo
Almost all trading platforms have demo accounts. If your trading platform has a demo account, its a blessing for you. Demo accounts are simulated accounts meant to give you an idea of how the market looks like and how well to trade. The difference between the demo account and the real account is that with the real account, once you lose you lose. There is no going back. This is the more reason for you to take your time and practice your analytical skills on trades using the demo account. Any form of strategy that might develop should be tested on the demo account to know its effectiveness.
There are so many things that might go wrong when trading with your real account. You might lose money and that can lead to an emotional response from traders. If care is not taken that could be the end of that trader’s career. This is why the demo account has been established to help traders like yourself trade better. Even though the demo account does not give the actual emotional response that a real account would, it is a good starting point for any trader.
Don’t make it complicated
What this means is that you should avoid complicating your market analysis. Most times when traders use simple techniques which produce little profits, they tend to think that their profit margin can change if they factor in lots of variables. But this is a misguided notion. It usually yields the opposing effect. Avoid using multiple indicators of the same type- such as two oscillators or two volatility indicators.
Any technique of analysis that is not often used to improve trading outcome should be removed from the chart. You should pay attention to the overall workspace as well as the tools that are applied to the chart. Your fonts, colors and price bar types should create an easy to read chart interface so that you can respond effectively to any changing market condition.
Understand the risks of leverage
In as much as using leverage can boost your profit margin it can also exponent your loss in case you lose a trade. Which you will lose eventually at a point. It is advisable to use not more than one percent of your trading account as leverage in a single trade.
Start small when you start making live trades
It is true that the natural instinct of every trader is to make more profit. Ego a larger investment capital will yield a larger profit. Even though there is truth in that, it is advisable to start small to allow yourself get familiar with the trading environment in the real world. You may be making huge profits with the demo account but that’s all it is, a demo account which is no way close to the emotional experience that lives trading live offers.
Keep accurate records
Experience they say is the best teacher. Keep records of your losses and successes is a good way to learn what works best for you and what doesn’t. As the old saying goes, I see I forget, I write I remember. Ego keeping records will be a good way to remind yourself of your growth which is a good thing because it can boost your morale when you encounter losses. The journey of a forex trader is not for the weak-hearted.
Treat trading as a business
There is no strategy on how to make fast money trading Forex. As the saying goes, the man with the right attitude always succeeds. Attitude is everything in forex trading. You need to treat forex trading as a business. Like every other trade, it takes time and patience for it to grow. That’s exactly the attitude you need to have to trade on Forex. This way, you will not be emotionally hanged up on your losses or wins. Instead, you will keep pressing on till you reach your trading target. Roam they say was not build in a day.
Manage your trading account
An effective account management is always the hallmark of any veteran professional trader I know. Part of trading is knowing when to accept your loss and move on. There are many money management techniques out there that traders use. For instance, the proper application of stop-loss order or limit order is a good way to protect yourself from further losses. When you trade this way and not allow your greed to get the better part of you, you will be playing in the big leagues in no time.
Understand the implications of tax and treatment.
Lastly, you need to understand the implications of tax and treatment of forex trading activities. Consult a tax specialist who can help you avoid any surprises and can even help you take advantage of certain tax laws. It is always good to pay your taxes. Do not deceive yourself by trying to hide from tax payments until it becomes too late.
After all that has been said, I believe that if we as traders follow these guidelines it will make forex trading a less complicated and easier. The bottom line is, no one can know what happens next in the market but we can try to make close enough guesses. Always keep in mind that there is no way to predict market for 100% accuracy and that many variables should be taken into consideration regardless of your past performance and experience.