With today’s shaky markets, investors are looking into Forex as their safe haven to save themselves from market uncertainties.
With the Forex market’s enormous size, it’s unlikely that recession can affect this market badly. Traders can weather financial troubles and even thrive on it. This is why numerous trading websites promise overnight success to hapless traders or people who’d like to try it for the first time. Excitement is what drives them to jump in quickly and loses their ability to think.
But what separates smart traders from the bland ones is they intentionally spend time in beefing up their Forex trading knowledge before throwing in a lot of cash. The saying “haste makes waste” has always been applicable to any ventures, most especially in trading. Yes, you can gain learning from experience, but equipping yourself with knowledge first can make way for better decisions.
It’s impossible for traders to find a shortage of Forex learning materials – especially online. But the downside of this too much availability is that they’ll find it overwhelming. The irony here is that this might be the very thing that would hinder traders from actually learning.
In this article, we’ll discuss three rules to help you start off trading on the right foot.
DO NOT DEPEND ON LUCK
Infusing luck into trading currencies will surely make way for lots of disastrous outcomes. Trading is no child’s play as well. Forex trading suits those who are serious in mining its massive benefits – those who are willing to develop a concrete plan and trading strategy, a winning mindset, and money management techniques.
Newbie traders should also be proactive in seeking out tools that can improve their trading journey. But be reminded that it’s not the tools that bring good results, but how you choose to use them.
MAKE A PLAN AND STICK TO IT
Before making the big jump, you should do some serious research about the trading strategy you will follow. Your goal is to be a profitable trader, but without a solid plan, that goal is just a wish. Also, if you’re unable to stick to it, you won’t be here for too long.
The inability to create a plan, and the unwillingness to follow a plan are driven by emotions. Being too excited with trading can paralyze your logic to establish a concrete plan first. While anger, worry, and even greed can push you to go against your plan.
Forex trading is not for emotional human beings. If you can’t wrestle with your emotions, then stay away from it. Emotion-driven trades would just result in a series of heartbreaking losses. Better save yourself from these perils.
BE RESPONSIBLE IN USING LEVERAGE
Many traders are using the terms margin and leverage interchangeably.
Margin is your money, while leverage is your broker’s money. Thus, leverage does not belong to you.
We have been saying that leverage can magnify your potential profits, but can also magnify your potential losses which can lead to a depletion of your account.
A leverage of 1:100 may look appealing because it gives you the ability to trade 100 times more. However, this ability can also multiply the speed at which you will lose your money by 100.
Again, use leverage responsibly, or it can work against you BIG TIME.
Related: 3 Types of Stop Loss to Minimize Your Trading Risks
