As we know, the Foreign Exchange (Forex) market is a market with lots of liquidity and you can make quite some money there, if you know what you are doing. The Forex market is open Sunday night till Friday night around the clock and buying and selling of currencies is fast and easy, once you have the necessary skills.
As a matter of fact, 95% of all Forex traders are losing money on the market and based upon experience, I know that it is not that simple to consistently make money trading Forex. In the following blog post are 7 things worth considering that will help you stay in the game and learn how to trade the Forex market, so that you might eventually make consistent profits over the long run.
I will not explain all the basics and the Forex jargon, as this would break the intended size of this blog post. This means you should have some basic knowledge of Forex trading and the specifics involved, otherwise the information presented here will be sometimes hard to grasp for you.
By doing an internet search I am pretty sure you will find free resources that will help you in understanding the basics of Forex trading.
1. Follow The Trend
As an old saying goes: “The trend is your friend.” It is very true for the Forex market. Going against the trend will not help you in the long run. It is of course true that there are always different trends running on different Charts in dependence of the time frame you choose, so it might be not too simple to figure out where the real trend is and how you can profit from it. Practicing will help you figuring out where the trend is, and how to ride it to your advantage.
2. The Secret Of Support And Resistance Lines
Whenever we can draw an horizontal line where the price often moves around over time or often bounces back upwards or downwards, we have a support or resistance line. It is called support line when the price comes from upward and bounces back up again, and it is called a resistance line when the price comes from downwards and bounces back down again. These lines are interesting, as there is usually some price action going on whenever these lines are broken or whenever the price bounces back on them. This is the reason why they might offer a great opportunity to start your trade; through practicing you will learn how to utilize these lines.
3. The Magic Is In The Naked Charts
Forget about all these indicators, they are usually completely useless. If you have a clean candlestick-chart, that is all you need. The candles show you the prize movement within different time frames and will give you insides on prize levels that are of interest and importance. What you need in order to succeed is that you learn to read the charts in the right way; the best way to get there is by practicing it.
4. Never Enter The Market Directly
Whenever you are trading, trade through Limit or Stop orders. Never enter the market directly by buying or selling at the present market prize.
This is more a psychological thing, because by deciding where to put your order you made a plan before doing so, that will give you a higher probability to win than to lose. It is hard to explain and even harder to prove, but ultimately true.
5. Always Take More Than You Might Eventually Lose
Your TakeProfit must always be bigger than your StopLoss, if you want to win in the long run, and of course you should set a StopLoss and a TakeProfit, always. Be aware that you usually have a Spread (because your broker also wants to make some money) so that you choose your TakeProfit and StopLoss according to that and still have a bigger TakeProfit.
6. Proper Money Management Will Keep You Alive
Never ever lose more than 5% of your capital per trade. Even better would be 2%, and even better than 2% would be 1% per trade. Trading the Forex market is really risky business, so there are many traders that will tell you that proper money management is one of the most important skills as a Forex trader, if you want to actually make some money in it.
You will control the percentage of your capital you set at risk by choosing the right Lot-Size and a proper StopLoss.
7. Demotrade, Demotrade, Demotrade
The smart people out there will teach you that you should at least trade for 6 month successfully on a Demo-Account before actually risking any real money. To be honest with you, it might take a couple of years until you will achieve a successful 6-month-Demo-Trading-period. It depends on a lot of factors, and if you have a huge portion of talent, you might get there faster.
Just for the case that I have not mentioned it, a Demo-Account is offered by nearly all brokers and provides you with real market conditions, but you are not trading with real money. So it is perfect to try out whether you are ready to trade for real. If you are unable to make money Demo-Trading, do not even think about trading with real money, if you do not want to lose it.
Forex trading is not as simple and easy as it might has been promoted to you. It will require lots of work and practice until you will consistently be able to achieve profits. Before you ever start real trading with a money account, make sure you get yourself a Cash Back Forex account. It is free, and you would give away money if you do not utilize this offer.
Sign up with CashBackForex right now or at least save the link. Click here to get to the CashBackForex Website (link opens in new Tab).