How To Stay A Professional Forex Trader
The global foreign exchange market is a $4 trillion a day operation, making it attractive for traders of all kinds. High liquidity, round the clock trading as well as cheap costs due to leveraging makes it easy to trade forex and make money. Unfortunately it means it is easy to lose money as well, which is what mainly happens to beginners. The following tips from professional forex traders are designed to help you avoid losing money and staying in the game.
First do thorough research before investing your hard earned money. Learn all you can about the currency pairs you wish to trade, like economic or political factors that affect the direction a currency moves. A change in market regulations or current events have an effect so study how important these are. Of course live trading and personal experience should not be overlooked so get a practice account and trade as much as you can without risking your capital.
The main goal for participants is to make money, but equally important is to avoid losing money. Hence the successful trader will use protective stops at all times. These protect your capital by limiting how much money you lose if the currency position moves against you. Never trade without using one and you are less likely to get wiped out. Equally important is knowing how to protect or lock in your profits. A common saying among traders is that 50 percent of something is better than a 100 percent of nothing, so be reasonable in profit expectations. Depending on market conditions, some veterans like to take half their profit at the 50 percent level just in case the market doesn't get all the way to the desired level. Trailing stops are also a great idea as they similarly prevent you from losing all your profits, while giving the trade position the chance to keep improving.
Starting small as a beginner is wise, no matter how much time you have spent as a practice trader. Using real money adds an emotional aspect to the proceedings, so it is hard to tell how any person will react. It is preferable to invest only as much capital as you can afford to lose, until you have gained experience and honed you trading strategies. Also be careful when it comes to using leverage in your trading account. Using 50:1 leverage, a trader can control $10,000 with only a $500 dollar investment. Although leverage means that you can make much more money than would otherwise have been possible, it also means you can lose more money than usual. Most professional forex traders rarely use more than 10% of their available funds in all active trades in order to limit risk, and all traders should be disciplined enough to do the same.
Run your forex trader account as a business. Most businesses do not make a lot of money at the beginning so don't expect to get rich quick. Neither should some monetary losses make you decide to stop trading. Remember that what matters isn't individual winnings or losses, but the overall performance over time.
All trading can be a risk!
