Trading the Forex market can be tremendously exciting and rewarding but that doesn’t mean that starting out can’t be nerve wracking and at times frustrating. That’s why eToro offers you these 10 top tips to help you trade:
1. Get Your Feet Wet Gradually. Most new traders start by opening many trades and then find it hard to monitor them all. By focusing on just a very few trades in the beginning you’ll give yourself the opportunity to keep track of your trades, and to get to know how the markets movements should be reflected in your trading approach.
2. Stop Forgetting Your Stop-Loss! The key cause of unsuccessful trading is excessive losses and the single biggest cause of losses is incorrect portfolio management. Remember that a Stop Loss is not there for decoration, it is there to prevent your losses from mounting up. Use it wisely and you will soon see your loss rate reducing!
3. Build A Trading Plan/System. Every trader develops their own individual trading system, depending on the amount of time they dedicate to trading. Traders with more time may adopt a day trading strategy, while others might trade longer term positions. The important thing is that, whichever trading style you adopt, you stick to your trading plan. Many new traders who experience trading losses find themselves tempted to switch approach however one or two losing trades don’t necessarily mean that your trading system isn’t going to be a profitable one.
4. Don’t Cut Your Profits Short. The number one mistake new traders tend to make is closing their winning trades too early. By sticking to your trading plan you can learn to avoid making hasty exits which will reduce your potential profits.
5. Don’t turn Profitable trades Into a Losing One. Once the market is going your way and your positions show a profit, keep a close watch on them. Move your stop loss forwards to your entry point to secure your investment. Then keep moving your stop loss forwards in the direction of the trend to secure your profits and prevent your trade from slipping back into a loss.
6. Beware Of “Scaling In”. “Scaling in” is a strategy where an investor increases his position size when the position is negative, hoping that it will retrace back and close all the positions in profit. Using a “Scaling in” strategy isn’t necessarily a bad thing but it can quickly wipe out your account if you don’t know how to use the strategy correctly. As such it can be a risky approach for the beginning trader.
7. Plan Ahead. Never enter a trade because the price is suddenly rising or decreasing. Always plan your trades in advance. Know your desired entry point, Take Profit and Stop Loss rates before you trade and wait for the right opportunity to arise.
8. Preserve Your Capital. Profits are there for the making, but the real key to lasting Forex achievement is not to make profits; it is to keep hold of them. Letting profitable trades run, cutting your losses quickly and keeping cool under pressure and in line with your trading plan is you key to profitability not for a single trade but across all the trades you make.
9. Trends Carry Momentum. New Traders are often unaware that as a new trend starts to build its momentum tends to increase. Additional traders will tend to jump on board an emerging trend, strengthening it as it continues to develop. Try to trade with the market’s momentum on your side, as it will often push your trades in the right direction, hitting your profit targets sooner than you might expect.
10. Don’t Waste Your Time On A Losing Trade. If you find yourself in a losing position, remember that it is better to save your energy, cut your losses and move on to the next trade. The Forex market is full of profitable opportunities, just waiting to be exploited, so don’t waste your time on an unprofitable trade!
Author : Etoro Team