I'm able to realise why the foreign exchange market is really a well known investment alternative. Start-up pricing is very low, the schedules are very flexible, and the potential earnings are eye-catching. The sad part is the fact that 95% of all of the traders will end up losing money. I want to share some of my knowledge about you; I hope this should help you end up part of the few who profit with currencies.
1. Trade only on large time frames.
Trading on small-time frames is very profitable for some; it's profitable for your broker, for firms that sell signals, as well as for some system sellers. Short-term price movements mostly are random; there's a million of variables involved which have absolutely nothing to do with the main trend. No-one can predict with enough consistency what the prices is going to do on short-time periods.
Successful forex traders use daily and weekly charts, mainly, for their trading decisions. Personally I only take positions once a week.
2. The secret from the rich: Management of your capital.
There is a huge difference between gambling and investing. If you don't want to wipe out your bank account, like 95% of the traders, you need to add sound money management rules into your trading decisions. If you realise nothing out of this article but this you will be a better trader than most.
3. You'll need a plan
People can't be prepared to trade with no plan and be profitable; unfortunately most do. You need to know what to do on every case scenario. Just how much to purchase or sell? When to enter the market? When you should take profit or loss?
Keep the emotions under control, don't let the sporadic set-back affect them. The key, to become a successful trader, is to be bold, have cold blood, and trust your trading rules.
5. Losses are a normal part of the trade.
Drawdowns are those times, in your trading career, where your losses add up, making you doubt your system, or worse, yourself. Learn how to love your losses or, at least, accept that they are part of the deal. You should expect the occasional drawdown you account from time to time. So long as losses are under control you've got nothing to bother with.
I know trading the foreign exchange market can be a rewarding occupation; you need no special skills or natural talents to become successful trader. A person with the determination and the right information can teach me to trade. The only thing you'll need is a great mechanical system, sound money management rules, and most importantly self-discipline.