/10 Forex Trading Tips that Could Prevent Disasters

10 Forex Trading Tips that Could Prevent Disasters

In this huge market with a strong competition, traders must be aware of the risks and learn to avoid critical mistakes. We’ll provide 10 Forex trading tips that could help traders prevent disasters.

  1. Learn to know the markets- Like any other business, Forex trading needs to begin with the fundamentals and educating yourself on the Forex market is vital and requires long hours of study over currency pairs. Each trader should understand and what influences them before risking his investments.
  2. Create a good trading plan and stick to it- To have a trading plan is critical in a constantly changing market. It should include profit goals, risk tolerance level, methodology and evaluation criteria. Once you have a plan in place, make sure each trade you consider falls within your plan’s parameters. Remember: you’re likely most rational before you place a trade and most irrational after your trade is placed.
  3. Practice – Test your trading plan in real market conditions with a risk-free practice account on forex.com. You’ll get a chance to see what it’s like to trade currency pairs, test your trading plan and keep your investments intact
  4. Research the state of the Market – A good trader is always up to date with the financial news and political data of the currencies they are trading for. Researching the market and what influences its fluctuations, combined with a good set of tools can always bring a plus to your trading strategy.
  5. Establish Your Limits from the Beginning – This a very simple tip but also critical in the success of a trader. This implies knowing how much you’re willing to risk on each trade. Set your leverage ratio in accordance with your needs, and decide to never risk more than you can afford.
  6. Know Where to Stop Along the Way – Because nobody has time to sit and watch the markets 24/5 it’s better to manage risks and protect potential profits through stop and limit orders. This allows traders to exit the market at the established target, protecting profits and limiting the risk for losses.
  7. Control your emotions and keep a tempered attitude – No trading business works entirely on successful transactions and this means you need to learn how to properly handle your losses. Stick to your plan and don’t let emotions get in the way of your future decisions. It’s better to step back and analyze what went wrong and recover the lost step by step, than to wake up in an even bigger mess.
  8. Choose a broker that offers a good trading platform – It’s very important to choose the right broker when entering the Forex markets. A good broker comes along with a good trading platform that will allow you to do all the analysis you require to avoid risks and maximize profitability. Always look for a good broker with a good platform cause having issues with any of them can be harsh and costly.
  9. Quit your plan if it doesn’t work – Each trading day can be a lesson and each lesson will help you grow. Trading needs might change on the long run and the initial starting plan could be outdated or just not for you anymore. Learn to re-evaluate your strategy and trading plan if things aren’t working out as expected and adjust them to your needs. If your goals are changing so should your plan.
  10. Engage into weekend analysis – During the weekends when the markets are closed you can sit down and study the weekly charts to look for patterns or clues that could affect your future trades. Understanding the charts can provide precious information and could help formulate the entire upcoming trading week.