1. Don’t run before you can walk
If this is your first day into the world of forex trading, then taking things slowly is a great idea. Opening too many position at once just adds pressure and can lead to oversights, mistakes and poor decision making. Opening a few positions allows you to keep a close eye on them and learn how the forex markets react to world news without being overwhelmed.
2. Remember your stop loss orders
If you don’t take measures to limit your potential losses, then you run the risk of losing more than you have to. Implementing appropriate stop loss orders limits your exposure and protects you against tricky situations meaning that you are always in control, even if the rates should change unexpectedly.
3. Use the rule of one sixth
If you ask most financial experts and successful traders, they will tell you that they adhere to the rule of one sixth. This basically means that you never risk more than one sixth of your total available capital at a time, especially if you are not completely confident in the position’s performance or the current state of the foreign exchange market.
4. Have a plan and stick to it
Make your decisions on how you want to trade and stick with them ? don’t let emotions get in the way and don’t chop and change too much. You can have a short, medium or long term plan, but make it one you are comfortable with and try not to deviate from it too much.
5. Understand the time frames
Your analysis needs to be appropriate to the data. A weekly graph will give you an idea of the various forex trends coming to the fore of the foreign exchange market, whereas hourly figures are best for determining the best times to open or close your positions.
6. You’ve got to know when to hold
Most beginners have trouble maximising their profits because they sell too early, closing the transaction before it has peaked. It is easy to panic and close a position because it seems like a great deal, but most forex trends will last longer than you might first think.
7. Know when to fold
Most unsuccessful positions are best closed sooner rather than later. If it’s not working, don’t leave it open any longer than necessary.
8. Don’t try to cheat the trends
Whilst it may be tempting to take a punt, most transactions against a forex trend will result in a loss. Wait for movement in the right direction and use it to maximise your profits.
9. Follow those in the know
Many forex trading platforms will allow you to see who is leading the markets, so if you aren’t sure what to do then copy the transactions of those who are getting results.
10. Trends will usually build in momentum
Beginners often fail to recognise that trends usually build quickly as other traders follow them. Use this information to benefit your positions.