Traders never fail to say that Forex is always a risky process. If you’re not careful, then your hard-earned money shall disappear as quickly as the snapping of fingers. And they are most probably right.
They say that it’s easy to earn huge profits from Forex; why do people still fail and lose huge chunks of money? Simple. It’s because they don’t understand the pitfalls they can fall into. They are only aware of the good things Forex can bring them.
People are not born traders, but they can be made into one. Here are some tips that will make you a better trader:
- Have enough practice. Trading companies allow you to create practice accounts or demo accounts. These accounts allow you to play around with the systems and make you see how the trading process goes. This does not involve shelling out real money, so in here, you might be too relaxed and be more courageous. But still, this makes you realize which styles work for you, and this makes you see what kind of a trader are you.
- Never allow yourself to be ruled by your emotions. Control it as much as possible; know your strengths and exploit it. The decisions you make should be based on careful analysis and market fundamentals; you should not rely on your feelings and have them influence your actions. Yes, there’s what you call ‘gut feeling’, but Forex is more of a numbers game, and there’s not much room for experiments.
- Your actions should not be based on other people’s actions as well. Forex is a very volatile market; it’s also constantly changing. Someone may have traded and received a huge profit in dealing with a particular currency, but you may not be as lucky if you try to attempt the same action. Do what you feel is right, and not just because someone told you to.
- Choose your broker carefully. You don’t just go choosing the first broker you meet. Look for a reliable broker. Use technology in doing the necessary research. Remember, these broker/s will be the ones handling your money, so you have to be careful in picking out who to designate as your broker.
A knowledgeable trader has higher chances of being a profitable broker. He knows that confidence should be built before he proceeds trading with real money. For him, losing is inevitable, and is a part of the game, but he also knows that profits are on its way, and he does not switch to a different system or strategy.
With this wisdom, he will have small losses, and gain greater profits. That knowledge will make him a better trader over time.
Contribution by Admiral Markets, A Forex Broker from UAE