Seven Tips You Need to Apply to Become a Successful Forex Trader
The Forex market provides you with the opportunity to make money if you decide to take trading seriously. First, it is useful to know what the Forex market is. Simply defined, the Forex (short for the foreign exchange market) is the "global, worldwide-decentralized financial market for trading currencies" and determines the relative values of currencies to each other. It is the most fluid financial market in the world and is open 24 hours a day except for the weekends.Credit: http://www.freedigitalphotos.net/images/view_photog.php?photogid=1152
The seven tips presented below are here to guide you through your education as a trader:
* To begin with, Forex is not about gambling. When you invest in something, you are not making a random decision. You should always find out which trend is dominating the market and look at analysis and predictions of the upcoming trends. If you cannot justify an investment rationally, you are not making a good decision.
* Before trading with real money, you should practice with a demo account. A demo account allows you to trade on a virtual market or on a real one with only a few cents invested in each transaction. It is a good way to familiarize yourself with your broker and get some concrete experience before you move on to real investments.
* Trading against the trend is generally a bad decision. You will make educated decisions if you follow detailed analysis and predictions published by trustworthy sources. Many other traders will use these same sources and start a new trend. In most cases, following the trend means you are making the most rational decision along with everyone else. You should go against the trend only if you have solid evidence that there is a better investment available.
* Trading can be stressful, especially if you are losing money. You should find a way to stay in control of your emotions so you do not make bad decisions out of frustration or excitement. If you feel too stressed to make rational decisions, you should take a break from Forex.
* The Forex market closes on weekends in most places, which means investing on Friday night is not a good idea. If something happens over the weekend, the value of your investment can drop down to nothing by Monday morning. You should also know that transactions can occur slowly on Monday morning because the market is opening again. Ideally, you should trade from Monday evening to Thursday night.
* The simplest trading strategies are the best. Spot a good investment, decide how much money you can afford to risk, choose a goal for your profit and a limit where you can sell without losing any money. You should always have this kind of strategy in mind when you invest and never change your plans along the way. If you use a more complex strategy, you will end up committing mistakes and changing your mind.
* If you have doubts about an investment, you should not complete the transaction. Being a good trader means you should always be in complete control of what you are doing. You should always be able to rationally justify all of your investments by looking at trend analysis. If you find yourself doubting a lot, perhaps you need to spend more time practicing with a demo account.
You will become a better trader as you practice and get more experience. Make sure you take the time to familiarize yourself with these tips and other concepts before investing your money.