From the choice of the broker to the development of a trading plan through the proper use of the various tools at your disposal, I come on board with the fundamentals top 10 tips and Tricks for trading. You’re going to find in this article the trading technique of the professionals.
#1. Choose Your Broker Carefully
In the first place, it is particularly important to opt for a quality institution. Check the reputation and seriousness of your potential future brokers and the bank or institution to which they may be attached. You can help by consulting the list of authorized investment service providers or the list of permitted intermediaries in the Financial Investment Advisor category.
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Also, the rates must also be taken into account when choosing your broker. Compare the transaction costs offered by the different brokers, and possibly the size of the spread, that is, the difference between the purchase price and the selling price if the broker is remunerated as well.
#2. Establish A Trading Plan
A trading plan allows you to know how to act in each situation because you will have thought before. There is nothing worse than deciding the heat of the moment. Would a business person have an idea to start a business without establishing a business plan beforehand?
Your trading plan must also allow you to set achievable goals. To start, a beginner must set a single goal: do not lose. Then, if you get there, try to aim for a small goal. If you can reach it, then you can try to aim for a bigger performance. Success is in the regularity.
#3. Strictly Adhere To Your Established Trading Plan
Stay there scrupulously! Just because you hear about a new miracle indicator does not mean that you will have to change your plan. You will often hear about new martingales to win without ever losing. Respect your plan and forget the dream sellers!
#4. Apply The Rules Of Money Management
Some beginners are not shocked by jeopardizing 15 or 20% of their capital on a transaction. The master rule of money management is simple. You should never risk more than 1 or 2% of your account on a transaction.
Many traders still take positions of a fixed amount. It’s a big mistake. You must commit a sum of money in trading depending on the market and your capital, not according to your desires.
#5. Avoid Scattering
Diversification is a good thing when you are an investor, but a beginner in trading has an interest in following a single strategy at the beginning with a very limited investment universe: do not try to trade a multitude of securities or currency pair for example.
Do not try to revolutionize the trading world either. It is better to use a good old method that has been proven over the last few decades rather than looking for a new system that would save a lot more. It is in old pots that we make the best jams.
#6. Be Careful With Leverage
Leverage is indeed a double-edged tool: You will always be very tempted to take big positions to make a lot of money, but will you be careful when you use your leverage? Generally, no. You will often tend to think only about earning when taking a position.
Remember that if you can win for example $8000 by taking a position on the forex trading market, you could just as quickly disappear like smoke.
To avoid making mistakes, a beginner should never exceed a leverage of 2 or 3, and a seasoned trader should be limited to 5.
Try to take a small position and double it if you are on the right trend.
Know how to cut losses
Before you can win, learn not to lose.
It’s essential always to protect your capital with a stop loss order; a motorcyclist must use a helmet to protect his life; you must use a stop loss to protect your money also.
Never take a position without a stop loss order, even if you are in front of your computer to monitor the courses.
Place your stop loss before validating your order; a common mistake accumulates losing positions without wanting to cut them. Provided that the position is wide open, the loss does not exist; your loss should be minimal.
It is, therefore, better to quickly cut a losing position. And the sooner, the better, the greater the loss, the more difficult it will be to close the deal.
#7. Keep Your Cold
Use patience to look for the right opportunity and to be able to wait for market conditions as to be favorable to the strategy being applied.
Beware, beginners will often make the mistake of taking a position without respecting the plans or strategies previously put in place because it’s more exciting to be in the market than to follow its evolution. Be strict with yourself in respect of your trading plan.
#8. Trust Your Judgment
Many traders do not do market analysis and have no opinion. They are content to read reports and analyzes published by professionals. Is this the right way to learn forex trading? No, of course. And by following the advice of others, you will be vulnerable because you will not be able to detect their mistakes. Trust your reasoning.
You must not let yourself be overwhelmed by your emotions, but you must not ignore them either. Knowing how to manage your emotions is one of the keys to success for a trader.
#9. Trade With Money You Do Not Need Immediately
Whenever possible, you must trade with money you do not need to live. On the one hand, because it’s not excluded that you can lose it and, also, because by trading with the money you need to live, you will not be able to manage your emotions properly. Your emotions will take over your rational reasoning.
#10. Spend Time Learning
Forex trading, a profession in its right, and as for all trades in the world, you must first learn: It’s not enough to open a forex trading account and read some daily analysis
You have to learn and learn from the many specialized books that exist but also training in trading, an essential step for all those wishing to trade in the forex and finally practice simulation to start.
Finally, Motivations are important, and if you start trading with bad motives (you want to be very rich, want to be famous, work from home), you’ll be disappointed very quickly by trading. You will then take higher risks to reach your bad goals. Trading, like many other activities, must be learned as well as should be a passion. You’re good to go about forex trading should you take heed to the advice on this post, enjoy.