Forex Trading is a cruel market, which you can make you an instant millionaire and also instantly broke. In this mode, it might be hard for you to handle if it is the other way around. But do not worry! We will give here some of the best tips that you can find in any other website so stay tuned.
Risk management is the key
When we are trading commodities or forex pairs, it is very essential for everyone to take note of the lot size and the spread of a certain trade. Most of the professional traders might say that you should allow 2 percent for each trade, which means if you have a wider Stop Loss and Take profit then you need to divide your lot size until it gets 2% for the Stop Loss and more than 3% for the Take Profit.
In this case, you need to lose 50 times for your account to get wiped, and it is very impossible for a trader to have that unless you are not studying the markets and making decisions without sufficient information.
Risk Reward Ratio
Albert suggests the newbie traders have a risk-reward ratio of 1:1.8 so that when you win a trade and you lose in the following, you still have the remaining.8 which still secures you a win. In this mode even though your win percentage is 50%, you are still gaining .8 on each winning trade that you have, which is not bad for you.
One of the notorious problems that Forex Traders are making is taking the winning trades too early and cutting the losses too late. I am sure you heard it tons of times but still, it is the habit that every trader is struggling to overcome. This is the main reason why you should also stick with 1:1.8, or even better like 1:2 if you can.
Avoid Trading in the News
When there is an Economic Data coming out in a certain hour, it is very important to stay calm whatever happens on the data, whether it is clueing an upside for a certain pair or vice versa. Normally in this time, tons of fakeouts are happening and one mistake can lead you in the deep loss, and the market can move 100+ pips in seconds, and you might lose your mind.
It is recommended to trade 30 mins after the news was released if you know what is happening in the country. Leave it if you are just guessing.
A lot of people are going out in this business because they cannot follow the simple steps to be profitable. It is sad to say but it is really hard to be disciplined, and if you do not follow these basic rules you will be the king of deposit.
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