Sunday, February 25, 2018

Forex Tip for Beginner: Trade Safely

April 11, 2010 by  
Filed under Forex Strategy, Money Management

Unpredictable. That is the only word we can describe today’s economy. However, it is this unpredictability that allows Forex Traders to profit no matter the situation. Forex market provides one of the most remunerative advantages for you because it is transparent and highly liquid. Even so, it is extremely important to learn how to trade in Forex market as it really need a lot of strategy, planning, discipline and management.

In this globe, Commercial banks, investor firms (be it big or small) and individual forex traders are trading in the forex market. You will need a internet forex broker if you wish to trade currency at the comfort of your home. The primary objective of foreign exchange is to make a profit by find out if one currency is going to grow or shrink in value against another currency. For example, Euro against USD dollar.

Like driving, learning how to trade safely is extremely important. Thanks to the extremely volatility. Here are something you need learn first before you start trading:

Technical and Fundamental analysis

Technical analysis traders depend on past price, resistance lines, charting and indicators to decide the timing to buy or sell a currency pair. Fundamental analysis traders uses economic and world events to buy or sell. Both has their merit and if you want to be a great forex trader, you need to know both side of the analysis. It is like the ying and yang symbol. One need another to be complete.

Trading Strategy

Research and found a trading strategy so that you can trade profitably in forex market. When you read a forex trading strategy, ask yourself these two questions, when to trade and how to exit from the trade.

There is a saying in the Chinese 36 stratagems, “Of all 36 stratagems, Self Preservation is the top propriety”. Learn not how to make money, but also protect your money too.

Risk to Reward Ratio

Are you willing to risk to lose $1 to profit $1? If yes, then your risk to reward ration will be 1:1. there are others that willing to risk $1 to profit $2 (1:2)

However, you should never risk more than what you can profit. For example 2:1. Because in the long run, your profit will not able to cover your loss.

Establish a goal

We are trading forex for a sole purpose: profits. However, there is more than just money. Have a goal that you wish to achieve by having more money. This is my goal: I am trading forex to achieve financial freedom so that I can spend more time with my family.

What is the purpose of having a goal? There will be times that you will be feeling terrible. Experience a lot of horrible events. This will be causes you to give up, not just in forex trading, but anything in life. Having a goal paste on your wall, you will be reminded by the reason you read this blog.

Cheers!

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