By Steve Cochrane

2015-07-30_1028If you’re reading this article then you’re clearly already interested in Forex trading (that’s what we professionals call stating the obvious). The chances are that you’ve seen someone making a bit of money, maybe a lot of money, and decided that you’d give it a go yourself. Don’t make the mistake, however, of assuming that you’re simply going to replicate what you’ve seen other people achieve. You may do better, of course, or you may do worse, but what you’ll certainly do is different, since Forex trading involves a particular blend of instinct, study, hard work and (yes) luck which is going to shift from person to person.

Like almost any other business model, successful Forex trading can be distilled to a few simple principles. Think of the likes of ‘buy low, sell high’ or ‘pile it high, sell it cheap’, business ‘plans’ which have earned some people lots of money, but which are much more complex to apply in the real world than they appear when set down in black and white. After all, if they weren’t, then there’d be a lot more millionaires around. The first DO of Forex trading, then, is to proceed with caution and learn as you go along, and the second DO is to commit this list of a few simple tips to memory:

Practice

DO practice on a simulator before risking any actual money. There’s always a chance that you might try working with the Forex market and decide it’s not really your thing, or that the evidence in front of your eyes (you’ve just lost a lot of simulated money) is warning you to keep your wallet firmly in your pocket. At the very least, you’ll get a feel for whether the Forex learning curve is one you’re going to be able to climb.

DON’T let emotions trade your judgement when deciding whether or not to make a trade. Every transaction has to be based on thought, analysis and research, rather than a ‘hunch’ or feeling. If your instinct tells you to make a trade, do the research needed to back up this decision, and if the research doesn’t back it up, tell your instinct to stick to picking your lottery numbers.

DO use money ring fenced specifically for the purposes of Forex trading. This can be a risky investment opportunity, and at the end of the day (or night) you don’t want to turn round to find you’ve lost money that was meant to pay the mortgage, for example, or put your kids through college. It may seem obvious, but in the euphoria of good trading or the panic of bad, it can be tempting to bolster your efforts with ‘just a bit more’ cash. Place funds beyond reach, if possible, to put them safely outside this risk.

Patience

DON’T expect instant results. Forex trading is a long game in most cases and doesn’t lead to instant gratification. If impatience tends to lead you to act impulsively, then Forex trading may be the wrong choice, at least until you learn to curb any tendency to rush things.

DO learn the difficult stuff. You’ve probably watched lots of news footage of traders shouting at each other, slamming down phones then quaffing champagne to toast their amazing financial gains. Success in the Forex market involves learning how to do things like study and interpret a currency pairs charts which, to begin with at first, will feel very much like that other thing you do. You know, work.

DON’T panic. Many times, new traders see a trade move into profit and cash in quickly, only to then see this profitable position mature and grow. The fear of losing money outweighs the chance of making it. A relatively simple way to avoid this happening is to set yourself a benchmark – sticking with a trade until it makes a certain percentage profit (30% as an example). By placing stop losses, automatic ‘alarms’ to remove you from a trade when the loss starts inching towards dangerous levels, you insulate yourself against the greater risk involved in hanging on longer term, whilst maximizing your chances of making a decent profit.

Leave a Reply

You must be logged in to post a comment.