You may be a novice to Forex market trading, but that doesn’t mean you can’t make a lot of money swapping currencies. It is risky, and it is just as simple to lose money as it is to make it, but if you keep a few basic rules you can end up coming out in the black even if you do lose some money at first. Here are a few sure-fire tips the pros use to turn a profit on the Forex market.
1 Choose the currency pairs that are right for you: Some currency pairs are volatile and move a lot even within one day. Some currency pairs are steady and make slow moves over longer time periods. Based on your risk parameters, decide which currency pairs are best suited to your trading strategy.
2 Decide how long you plan to stay in a position: Based on your currency pair selection, plan how long you want to hold your positions: minutes, hours, or days. Remember that depending on your account type, having open positions at 5 p.m. Eastern time may incur rollover charges.
3 Set your targets for the position: before you take a position you should establish your exit strategy. If the position is a winner, at what rate will you cash out? If the position is a loser, at what rate will you cut your losses? Then, place your stops and limits accordingly.
4 Use Forex Charts: they are an indispensable tool to improve trading returns. You can easily recoup the money spent on a charting package from a Forex website with a single well-placed trade based on the analysis from professional charts.
5 Follow Forex News: Trading news provides breaking information on economic reports and political events that influence the currency market. You can also access detailed market commentary and trading strategies from experienced Forex traders.
6 Keep a Forex Diary: Most traders fail because they make the same mistakes over and over. A diary can help by keeping track of what works for you and what doesn’t. Used consistently, a well-kept diary is your best friend. Always include the date and time you took the position; the rate at which you took the position; the reason you took the position; your strategy for the position; the date and time you exited the position; the rate at which you exited the position; your profit/loss on the position; and why you exited the position.
Please keep in mind that Forex trading involves a high risk of loss: Never risk any more money than you can reasonably afford to lose.