The key concept of trading in the foreign exchange market is absolutely based on the mechanism of buying one particular currency for another and reverses operation of selling it and accordingly makes profit. As a forex trader, if you want to make sure you reach your goal, you must know and follow some basic forex trading principals.
Principles as a Forex Trader
The basic forex trading principals are:
Make a trading plan – At the onset you need to create a trading plan based on some important factors for trading in the foreign exchange market.
Control emotions – Unstable emotional conditions may disturb your thought process and thus may lead to wrong decisions. You must understand your emotions and learn to control them in order to be on the right path.
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Keep historical data handy – Accumulate your own past data. Note down on a paper in which situations and on what factors you took decisions to open or close your orders. Add comment to each and every situation. Keep reviewing results of your work.
Learn from the mistakes – Evaluate and then work on your mistakes; this is one of the most significant components of a successful trade. Be self-critical while analyzing the loss positions. It would help you avoid repeating the same mistake.
Avoid trading without a reason – Don’t open a trading platform unless there is a solid reason. Only because you have nothing to do, can’t be a reason to open a platform. Trade only if the reasons are justified.
Work and think – Assistance or hint from another trader might help you, but not while you’re actually trading in the foreign exchange market. You may consider suggestions from the veteran traders but don’t follow them blindly. You can succeed only when you can make your own analysis, create your own trading plan and start relying on your decisions.
Trade confidently – It is always better to wait for the right moment to enter into the market instead of opening an order when you don’t understand the market breath. Learn to identify the right moment to enter and leave the market.
Unless you’re confident avoid taking the risk of trading. A few lot pips shouldn’t be compared to a large loss that may be caused by a rash action. Be patience and open your order; don’t hurry – the market is not going anywhere.
Limit risk – Be careful about how much risk you can take. Use an amount, loss of which won’t cause any harm to your family budget.
Know your capacity – This is very important aspect of forex trading. Know when to stop.
Don’t be overwhelmed with early success – Don’t lose your head from delight if you make a few hundred dollars of profit. Try to hold your profit and focus on your trade.
Don’t trade against the trend – As a trader, especially a beginner, it’s always better not to take any risk. During the process of price movement in any particular direction, market jumps up or down. To make use of the situation and short-term fluctuation, you must gather experience and this is perhaps the only way to minimize risk on forex.
Choose the right platform – Last but not the least, you must choose the right forex platform. Brokers may be chosen for the best forex platforms. Brokers like easymarkets.com may be chosen for the best forex platforms.
There is no rocket science in trading forex. All you need set a goal, remain focused and follow the basic principals – the success will surely kiss your feet.