Tips on how to turn your money into big money while trading Forex
While trading Forex, one of the best markets to make money today, is a matter of skill and constant learning. Before you start looking for brokerage service and perusing reviews like Instaforex review, dig deeper into some dos and donts of trading activity. We outline here some aspects of the trading process to help you get the most out of it.
Accept being wrong
The important thing in trading isn’t to be right or wrong. It’s to be a winner at the end of the month. You can even get it wrong more often than you are right and still manage to generate performance.
To accept that you are wrong is to accept to lose. You should, therefore, always place a stop loss and never move it in the opposite direction to your trade! This trading error is expensive for many individuals.
Accepting that you are wrong also means accepting that it is always the market that has the last word. It doesn’t affect the quality of your analysis. Technical analysis is based on probabilities, and probability means the percentage chance that the opposite scenario will occur.
Anticipate all possible scenarios
This is a recurring problem for all newbie traders. They set up a trading scenario but do not consider the other possibilities. Suppose you anticipate a rise in security, but a fall in the price is taking place. What do you do? Are you buying anyway? Do you sell? Switch to another product?
Other questions can be asked if you are already in a position. What do you do if a correction occurs? Do you keep or close your position? When do you move your stop? Do you cut your position if your goal is reached? What do you do if a sudden movement occurs?
Before taking a stand, you need to be able to answer all of these questions. Trading leaves no room for improvisation, especially if you are a newbie trader!
Not planning a scenario is exposing yourself to a surprise effect that can lead you to make irrational decisions, to give in to your emotions.
Not anticipating all possible scenarios also means missing out on many trading opportunities. Beginners tend to prioritize one direction and stick to it no matter what. No, trading is not that. You need to determine levels at which you believe the reverse scenario is most likely to occur. If you anticipate buying and support is broken, you should no longer be looking to buy but to sell.
You have to be able to adapt in trading according to the evolution of the price. If you stumble upon seeing only one scenario, you will inevitably end up losing all of your capital one day or another.
Focus your investments on a product
Beginner traders often choose a workhorse on which everything will be played out. In other words, they are overexposed in terms of risk on a product. We find this behaviour especially in the stock markets where traders always favour a particular value and bet a large part of their capital on it.
In each position, you must determine in advance how much capital you want to risk on the trade.
Beware that the market always has the final say. Regardless of whether all the elements are in favour of a rise or a fall, it would help if you always considered the possibility of losing. How much does the trade cost you if it loses? Ask yourself this question on every line of your portfolio or your trading account. If an asset is disproportionate or the risk is too great, exit your trade immediately before losing everything!