Five Simple Rules for Trading Successfully

Trading the forex can be one of the greatest, most exciting experiences that anyone can have, or one of the most nerve-wracking, depending on your level of expertise. It is also a known fact that foreign exchange trading can reap real results for your bottom line, but it can also completely deplete your funds. The main aim of trading foreign exchange is to maximize your earnings in a short time. There are so many ways in which you can benefit from trading and so many reasons why you should really do it, as it provides a fundamental approach to earning whether the market is up or down. For a beginning trader or any other trader for that matter, there are ways in which you can structure your trades and approach it from an organized angle. Not everyone will be able to trade successfully at first, but with lessons and actual experience it will get better over time. Many times, it is through trial and error that you realize just what it is that needs to be done to be successful. A basic understanding of charts, analyses and trading platforms will come into play later on as you become a more seasoned trader. Below are 5 simple rules that you can follow to get the maximum results from your trading.

1. You have to first ask yourself if trading is really what you want to do and why. Even if your answer is to make money, which is an obvious answer, you want to make sure that you don’t bite off more than you can chew. You have to ensure that it is something you will enjoy enough to stick with it, even if your earnings, at first, is not as much as you want it to be. You have to have realistic expectations, based on your capability as a trader. Many will say, or you will read of people who say they earn exorbitant amounts from trading. If you are a seasoned trader who has a huge margin or enough money to place on each trade then you will make money. The more money you trade, the more you stand to earn.

2. A strategy is important for any aspiring or seasoned trader, they have to decide beforehand, which currency pairs to buy or sell, how and where to set their stops, when to enter the market and what is their target. Most importantly, they have to decide how much to risk on each trade. The markets are volatile, you can lose your money as fast as you can earn it. Sticking to your strategy can help you to see results. It does not help to try a new strategy each time you trade. With everything that you do, it is good to be disciplined, trading is no different, switching gears can only harm your trading in the end.

3. Ascertaining what markets to trade in is equally important. Currently, there are four Foreign Exchange markets that you can trade in. New York, Tokyo, Sydney and London. New York market is opened at 8:00 am and closes at 5:00 pm, Tokyo is opened at 7:00 pm and closes at 4:00 am, London at 3:00 am and closes at 12:00 noon and Sydney opens at 5:00 am and closes at 2:00 am. Some sessions will overlap, thus providing an opportunity to make gains as currency pairs are more during the two market sessions. With each market, there are good and bad, but while the New York markets may be ideal for one person, the Sydney markets may be better for another, depending on their location and times they make available for trading. As a trader, being aware of your goals, available funds, personality type and lifestyle, as well as deciding how much risk and leverage to take on can help you to determine which markets to trade in.

4. Develop a plan and literally set it in stone, this goes back to the point about having discipline and sticking to your strategy. Decide on the amount you want to trade with and ensure that you don’t get tempted to go over budget as this sometimes happen. Whether or not you have made a lot on a particular trade, don’t be tempted to go back in, as the market can shift. Even with fundamental or technical analysis, both have the potential of failing if you are not a professional.

5. Learn about the different terms on a trading platform, terms such as stop-loss, limit orders, when to take profits and how to set your margins. This will minimize the stress of worrying and watching the currency pairs as they move. These pairs can move up as you watch your money appreciate in value then decline right before your eyes, but if your margin is sufficient, then it can ultimately go back up afterwards. Last but not least, when you use a trading platform, always pay attention to the disclaimer.