The instructions laid out in this article are very significant in currency trading business and the ones making use of them are generally the people remaining in the forex currencies market for a very long period of time. The one thing standing between the winning traders and losers is the capability to live by those principles and instructions. Don’t get me wrong at this point – the rules in the currencies’ market are and always will be equal for every person (not including a number of financial institutions or firms, manipulating billions of dollars) and only those traders who appreciate the importance of following the rules, remain in the market. The big problem is met when we observe our currency investing in a real action, and very frequently nearly every one of us either fails to remember what he has learned or stupidly ignores it. The answer to that question may be rather straightforward – those traders who already lost, learned that lesson and may be much more precise and guarded. Newbies often get overwhelmed by the greediness and the gold paved outlook and they do not understand or pay no heed to the clear principles. So why bother applying some dull “use this and don’t use that”? Anyway, let us talk a bit about these „dull methods”.
Do not risk big. Usually forex business traders run the risk of putting from zero point five to 5 percent of their funds for a single trade. It means that a small number of successive and faulty trades could still be just a 4 – 10 % loss of the entire capital. These repetitive loses could occur, and sometimes a lot, and being prepared for multiple losses is vital. I can only assume what could be the result of your trading, so to speak, if you were risking some 9 or even 20 % of your whole trading account for 1 trade entry. You could exhaust all your trading account capital in just a couple of weeks or even faster. Don’t nose-dive into large trading account capital risk for 1 trade operation. I previously used to trade by putting more than eight percent of my capital just for a single currency pair trade. Forex trading is an investment where your predictions and desires are usually not fulfilled, if you know what I’m saying. If your trade was incorrect, there is no assurance that your succeeding currency trade will be different. The possibilities of missing the second time are smaller (it depends upon your investing plan, tactics and foreign currency market conditions), however they still remain in the market. I suggest using less than five percent of one’s capital or even one or two percent and putting stops accordingly as soon as possible. You could be having a great trading technique and unbeatable method, however all this would not change anything, if capital control methods are not taken into account. It is of utmost significance, particularly when you are a day forex trader, making 3 – 9 trades per day. Furthermore, remember the psychological issues – ten bad trade entries worth of 12 percent or 15 percent of your account capital, or four losing trades cutting your trading account capital twofold. The larger the part of your account capital you are taking for your fx currency trades – the greater the possibility of a margin call. New traders need to be even more careful than trading experts, because their investing plan and tactics is new and only the time can tell if they are implementing the correct trading strategies. My advice could be trading in demonstration account for at least a few months and then switching to live trading account risking 1 % or even less capital amount for a single trade.
I would strongly advice to keep on with your forex methods and strategy despite what the trade record says about some exact day. I believe that every trading strategy has some pluses and minuses, and if it is not functioning for any unidentified reasons – it’s better to stop making trading decisions during that day. So what, if your currency trading system doesn’t produce good results in a unexpectedly shifting forex market conditions on some day – there are not any ideal tactics or strategies in this business. My recommendation is to turn off your computer, put on your shoes and take a stroll in the park or something like that. Bear in mind – there will be lots of chances another day.
During my early fx trading I would use just one position of any currency pair. After the market was moving in preferable direction I always had a dilemma: must I exit the market right away or should I wait more and make some more pips. You can only imagine what it was like, when the currency pair unexpectedly reversed and instead of taking one hundred pips profit I would have minus forty or fifty pips. Or the contrary – stopping my trade at forty pips and watching the price progress another 400 pips the same day. So, thinking about the number of pips that I could have made, was not pleasant at all. Then I found out about multiple positions’ usage and gradual profit taking. For instance, I was entering a foreign currency pair trade with five equal positions. I would close my first position at 20 – 30 pips, another at 50 pips and the remaining at a higher profit targets. By means of this account capital management I could make even the smallest pip number without any fear of not making more. I didn’t forget to move my stop loss orders, after the first profits were closed. I would suggest making similar trades.
The thoughts that I have shared with you have been born through some painful experience and I just wish you will learn something from them.
