As many of you might know, most Forex traders aren’t successful. Through rough estimation, 96% of FX traders fail and eventually quit their career.
Engaging the market in the proper way is hard, especially for beginner traders. You need knowledge, preparation, and sensible trading system to make it through the breakpoint.
However, you can still become a part of the top traders’ group. Global Markets gives you a list of guidelines to follow and avoid sinking your account.
Check them out and decide if you can pull them off!
Get the Market on Your Side
A common misconception among traders – you have to beat the market in order to be profitable. Quite on the opposite, traders who identify and follow trends correctly are more successful in the long run.
Striving for glory and bragging stories isn’t worth losing your account. You can get lucky at times, but the market will always prevail in a one-on-one face-off.
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Nonetheless, you can try to understand the market and use it as an ally. Finding profitable trends and trading towards them will grant you more consistent winnings.
Just keep in mind, the market is capable of shaking you out. Don’t try to get an enormous amount of profits with the lowest possible investment. If you engage trades against the trends, especially in an aggressive way, you risk losing your whole investment.
Implement a Risk Management Strategy
Global Markets trading experts state risk management is crucial for your FX career. You want to stay in the market for as long as possible. You can maintain that by having capital. If you overtrade and lose your capital, you won’t be able to trade on the Forex market at all.
In summary, protecting your funds is more important than winning high profits.
Here are three basic rules to follow when trading properly:
- Placing stop-loss orders is a must. Once you are profitable in a trade, make sure to move them accordingly.
- Lot sizes should always be in line with your account capital.
- If a trade loses its profit potential, drop it.
Use Reasonable Start-Up Capital – Global Markets Advice
Most FX traders enter the market to win easy money or clear out debts. This is why FX marketing teams will encourage you to push your limits and go for the big bucks with a little investment.
Large lot sizes and high-leverage trades can surely grant you enormous wins. They can also deplete your account before you reach any significant profits.
As a general rule, you need to save money in order to make money. This should go without saying, but many traders seem to forget it.
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It is possible to make respectable returns with a small investment. You can be an excellent trader and know the market well enough to predict it correctly.
However, trading with small sums carries outstanding risks. High-leveraged trades can be devastating to your account, so you will feel tension with minimal funds.
Many low-capital traders feel emotional when the market swings against them. They’d make an impulsive decision to drop (or continue with) the trade which will eventually compromise their accounts.
Global Markets capital specialists suggest never to trade with a minimum investment. It may take you more time, but entering the FX with $1,000 is more beneficial than investing $100.
Don’t Give in to Greed
Some optimistic traders strive to get every pip they out of every single trade.
However, holding a position just to gain one more pip in profits is a sure path to failure. Especially in the long run. Imagine it like this – you can win an extra pip in value or you can lose your whole profit if the market suddenly shifts. It’s simple math.
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There is a logical solution here – leave greed out of your trading system. Try to secure reasonable profits. Don’t push your trades further than you need to. Saving your account and gradually growing it is far better than losing it over a few prolonged trades.
Picking Turning Points Is Hard
A large percentage of beginner traders try to pick turning points in a currency pair. They pick a pair, choose a direction, and add to their positions even if it goes in the opposite direction. They believe in their prediction 100% and wait for the turning point no matter what.
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The problem is, this exact turning point comes once out of ten times. Picking tops and bottoms regardless of trend indicators is plainly sabotaging your own account.
It’s more profitable to trade with trends. Even if you think a trend is going to shift, it’s better to wait on a trend confirmation signal.
To give you an example:
- If you want to pick a bottom position, wait and pick it up in an uptrend.
- If you want to open a top position, execute it when the market moves higher. And avoid uptrends within a larger downtrend.
Stick with Your Trading Decisions – Global Markets Tips
Many times, you’ll open a trade and it will move the opposite of your prediction. In such a scenario, inexperienced traders tend to get nervous and start doubting their analysis and calculations.
They’d close a trade, reverse it, and then see the FX going in their initial direction.
It’s more profitable to pick a trade direction and follow it through.
Switching back and forth brings no real benefits to your account. Quite the opposite, it can drain your account bit by bit, until you don’t have any funds left to trade with.
As a final note to this piece, learn to accept losing trades and develop your own trading system. Don’t be afraid to experiment and protect your account volume at all times.
We hope this Global Markets will help you achieve it with ease!