Since currency trading is very risky for beginner therefore small investors should not invest more than 5% of their overall portfolio in forex market. This will limit their losses. New traders should not do over-trading. Never trade a position that is too large compared with the size of your trading account. Experts say that never put more than 5% to 10% of your trading account balance in a single trade. Over-trading comes from lack of planning. Traders should develop trading strategies based on technical and fundamental analysis before initiating a trade.
New traders often get trapped in speedy price movement of currencies and they lose focus on their strategies and finally end up with huge losses. Therefore draw some profit repeatedly otherwise you may lose all your initial investment.
Timings and luck are the two things that play an important role in forex trading. A good way to limit your losses is to set up a stop loss order. By doing this you will automatically exit a position when that particular price is hit, limiting your losses. For example, a trader with $10,000 in his/her trading account would not want to lose more than $1000 on any particular trade. Therefore he/she should set up a stop loss accordingly.
Traders should also use take-profit levels to get cash automatically at a preset profit. Take-profit levels help traders from losing profits when the movement of currencies changes abruptly generally on the release of economic reports or announcements.
Small investors should avoid automated training programs in currency exchange that assure large profits in a short duration of time. These programs also known as EAS or expert advisors execute trades in milliseconds may create greater risks for small investors. The occurrence of these EAs has grown rapidly in the last few years and they pop up online all the day. Although faster execution helps the traders to take the advantage of smaller moves in the forex market but the systems may have some hidden dangers and may collapse at some point. The programs that promise high return in short duration of time are likely to crash fast. The programs that show small but steady returns over long period of time are the best bets.
Forex brokers often provide historical trading information and data that can be used to spot trends. Some of the trading platforms provide news feeds and information to the traders that may affect the currency market. Since any major news or report can affect a currency, therefore news websites should be used as a great source for determining the direction of foreign exchange market.Potential losses in currency exchange may frustrate and drive the retail investors away from the currency exchange market therefore investors should diversify trading across multiple currencies and they should use trading strategies that work in different market conditions. Put only 10% of your trading account money into automated trading programs and use rest for manual trading.
Trading is that way a simple activity but how you handle your emotions with respect to market conditions is really a challenging task. For that purpose you required to practice and practice on demo account until you see yourself performing good for coming 3 months on positive side then only go for real account. In case of real account it is same don’t increase your input volume until you see positive consistent results for at least 3 months. One you get these skills no one can stop you from earning a very good amount of money in this market. You will become what you want to be. Have patience and keep moving Forward.
By following above tips, a trader can trade safely profitable in the forex market. You like this article please comment, like & share among your friends. Thanks.
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