Forex is a liquid market trading where there is consistent inflow and outflow of money. Many a time you might have come across websites or people ranting about how overwhelming it can be to trade in the foreign market. Well, if you have consistency, patience and awareness of what you’re doing, then it is a cakewalk. Here is a list of 7 essential tips to keep in mind while trading in the foreign market.
Use demo account
You might hear this a lot if you’re researching about the tips for trading. You cannot fly an aeroplane if you’re not trained. A beginner needs to understand how important a dummy account is. If you’re in for a long run, then you’ll have to analyse and chart out the possibilities. Definitely, you cannot do this whilst losing money. So a demo account is a must!
Invest in Education
Educate yourself about anything and everything about the market. Whether you wish to learn from a professional, or indulge in reading books and magazines, that’s your call. It is a wise decision to invest money in learning than to lose it in the market.
Create a trading plan
Once you’re ready to set your foot on the market, and invest your first dollar in the business, create a plan. From day one, till forever, you need to stick to the plans you make. It could include, do’s and don’ts, your wins and losses and also how you plan on saving or spending your investments. Maintain a book or a journal to note it down.
Avoid smaller time frames
Even though smaller timeframes are beneficial at times, it is always better to invest in longer ones, as it is helpful in the long run. For starters, you can start with four to five hours a day. This timeframe can also increase in time and can create room for mistakes. In the long run, you avoid making the same mistakes, and within no time, you shape up to be a better trader than you were previously.
Chase the trends, not the market
Trading trends keep changing every week, and it is important to follow these changes if you’re going for the big win. But having said that, it is also important not to chase the market, i.e. don’t do something because other traders are doing it. As a beginner, it might not be the best for you, but eventually, it will fall in place.
Trade like a machine, think like a human
Thus statement holds when you’re controlling your emotions to overcome the losses. A study shows that a person’s emotions are higher when he loses than when he wins. You need to be prepared to lose big if you’re expecting to win big. This applies to the case of winning as well. Once you win large amounts, it is human tendency to fall for greed, only to lose more money. Get good control of your emotions and stick to your plan.
You never know how luck can favour you on a particular day. So, it is better to start with smaller amounts. Even in case, you’re losing money, and you’ll have your exit strategy in hand and can back out without much loss on your pockets