Abstract：Making a thorough plan before you even think about starting your first position is one of the best things you can do to make sure you start trading forex successfully.
1. CREATE A PLAN FOR YOUR FOREX TRADING
Making a thorough plan before you even think about starting your first position is one of the best things you can do to make sure you start trading forex successfully.
2. PICK YOUR FOREX TRADING APPROACH WISELY
Based on the duration of open positions, there exist four primary trading techniques in forex:
· Scalping is the shortest strategy, in which trades are held for minutes or even seconds at a time. You close a position as soon as it even slightly goes against you.
· Closing all of your positions by the end of the trading session is the goal of day trading. Thus, they must be left open for a period of minutes or hours at a time.
· Next is swing trading, where the goal is to profit from the smaller trends within larger moves by holding positions for several days or weeks.
3. OPEN A DEMO ACCOUNT FIRST.
Speaking of experimenting, we usually advise new traders to begin with a demo account before investing real money in forex trading. In this manner, you can make sure that any first errors are made in a simulated setting without having to pay for them.
4. BECOME FAMILIAR WITH LEVERAGE
In order to make a profit in forex trading, you would need to invest a significant amount of capital without leverage. It's crucial to comprehend how leverage affects your gains and losses, though.
Your provider is effectively lending you the extra money required to cover the entire amount of your position when you trade utilizing leverage. This implies that the position's entire value will be the basis for your gains and losses, amplifying both.
5. AS YOU GET STARTED, CHOOSE YOUR PAIRS.
Once you have a strategy in place, a preferred approach identified, and some experience under your belt, you may consider making your first real transactions. It can be difficult to know where to begin, though, when there are dozens of FX pairs available.
To help you stay focused, it's always a good idea to start with one or two pairings. The following are some things to think about when selecting your pairs:
Rationality. Trade pairings with high liquidity typically have smoother price movements and lower expenses. The most liquid major pairs are often EUR/USD, GBP/USD, and USD/JPY.
6. AVOID TAKING TOO MUCH ON TOO SOON.
You don't want to chance losing all of your money on one poor trade when you're just starting out. By putting a cap on the amount of capital you invest in your holdings, you can rather easily avoid this scenario.
7. BEGIN BASIC
When you're just starting out in trading, it's also important to remember not to take on too much at once. In the FX markets, there are a lot of opportunities. However, smart traders know which ones to grab and which ones to pass up.
It's advisable to start out with just one trade open at a time so that you have enough time to process each position fully before opening another. If not, feelings may start to influence your decisions.
Additionally, you may wish to start with a limited set of technical indicators. In most cases, utilizing multiple is advised to prevent false signals.
8. USE A STOP-LOSS ORDER AT ALL TIMES.
Your long-term success in forex trading may largely depend on how well you manage risk, and the stop-loss order is the cornerstone of any risk management plan.
Your trading provider will be instructed to close your open position if it moves a predetermined amount of points against you if you use stop losses. They are helpful in preventing running losses on your positions.
9. ORGANIZE YOUR FINANCES
Managing the funds you allocate to each position is a crucial component of risk control. The 1% rule, which states that you should never risk more than 1% of your total funds on any one trade, is followed by many profitable traders. You would be taking a total of £50 risk on any position if, for instance, you had £5,000 in your account.
10. MONITOR YOUR DEVELOPMENT
Creating a plan is a great place to start, but in order to trade like a pro, you must keep detailed records of your progress, documenting the results of each position and the variables that contributed to its success or failure.
Fortunately, there's an easier way to do this than by hand. Performance Analytics is available to you at no cost with your City Index account and will provide you with real-time trade position reports. It can be used to monitor how closely you're following your plan and determine what circumstances work best for you.
11. TECHNICALS, FOUNDATIONS, OR BOTH？
Traders analyze the financial markets primarily in two ways:
Examining the economic aspects of a currency, such as central bank statements, money flow, and inflation, is known as fundamental analysis.
Technical analysis is examining the price chart of an FX pair and utilizing patterns and indicators to ascertain its future direction.
12. CUT LOSSES EARLY AND LET PROFITS RUN
A common trading credo is to cut losses and let profits run, and for good reason. It can be difficult for novice traders to execute because of the temptation to close a transaction as soon as the trade turns green and realize the reward. In a similar vein, learning to accept a loss can be difficult.
But chances are your success rate will start to rise if you can remain true to your plan when things become tough.
13. RECOGNIZE WHEN TO QUIT
Lastly, be aware of when to end your trading session and log off of the platform. Trading may be an emotional activity, and emotions—even favorable ones—will skew your judgment. Thus, after a run of profitable or unsuccessful transactions, remember to stand back and consider if it's time to log off.
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