A guide for aspiring Forex traders
More and more people are getting into the Forex trading business. They have seen the money-making potential of the business so they want to try it out. But the harsh reality is that Forex trading is easy to get into but is unforgiving. This means a lot of people quit before even making their first trade.
This occurrence oftentimes starts after a few weeks of practicing on a demo account. Either they don’t understand how trading works or they are afraid of transitioning. After all, when doing trades on demo accounts, there are no risks of losing money. But in a live trading environment, the risks are always there.
Before becoming a trader, they have to understand that losing is part of the business. Sometimes they win and sometimes they don’t. What they have to do is to try and avoid those losses by not making mistakes. Only through constant practice will they get the experience and knowledge needed.
This article will discuss important steps when entering the Forex trading business. Take this knowledge to heart and practice them on a demo account.
Check the daily pivot points
There are several types of traders. One can be a day, position, or swing trader. Some traders opt for long-term timeframes. Checking the daily pivot points will benefit any of these trader types. An aspiring trader needs to do this because other traders are doing the same thing. A trader must never let another trader get ahead of them so better to check these pivot levels daily.
Pivot levels sometimes serve as a prophet of sorts. Pivot levels are places wherein markets will either get support or resistance. It is also here where market turns happen. Trading moves happen at pivot levels because people traded while expecting some movement.
A trader’s strategy must not revolve around checking daily pivot levels. This is because regardless of a trader’s strategy, they need to do this check every single day. Through these levels, they would learn more about continuing trade trends. They could also see potential market reversals at those levels.
Pivot levels state any trading activity that they can take advantage of. They need to change their strategy depending on the present trading activity.
Always do winning trades
Most successful traders take advantage of knowing how much risk a trade would take. This means they only trade if they know that they have a clear advantage. This involves doing something that increases the probability of a winning trade.
This “advantage” can be anything. It may involve buying something at a specific price level that supports the market. It can also be selling something at a price level that has a strong resistance.
A trader can increase the probability of a successful trade through several factors. One is checking if a market has enough support or resistance. This can happen in a 10, 50, or 100-period moving average that has the same price level. Lots of other traders are also basing their trades on these moving averages.
The probability of success also increases when technical indicators rise. This happens when indicators on several timeframes combine to give resistance or support. An example is when different moving averages and timeframes have the same price.
In Forex trading, earning profits is important. But avoiding losses is more important than gaining profits. Beginners might think otherwise but for veterans, this fact is true. Succeeding in the Forex trading business involves protecting a trader’s investments.
Why is protecting a trader’s investment important? This is because lots of traders fail in the business when they ran out of funds. Without funds, they couldn’t continue making trades. Most of these traders have empty accounts before even striking a profitable trade.
Traders must risk management procedures to protect their investment. It must also align with their trading plan. They need to discern if a trade will cause them huge losses so that they can avoid it. Only by continuing to do trades will a trader earn from mediocre to big profits.
There is also the element of luck in every trade. Any potential trade can make or break a trader. If they manage to land a great deal, then their trading business is successful. A trader can only get huge profits and great trade potential if they have enough funds to use.
That said, the most important thing to succeed in the Forex trading business is to limit losses. Don’t overtrade or take too much risk on a single trade. This would allow the trader to protect their investment and be able to continue trading.
Having a simple technical analysis also helps in becoming a successful trader. These steps should help the trader achieve great success in the business.