Persist with your goals and learn from your mistakes. Forex trading is surely not for the fainthearted. Once you are adept at the workings of the markets and have turned pro in skills and market timing, you can consider making it your full-time occupation. To help you in your dream job, the paragraphs below list the main trading strategies. Furthermore, you must learn the tricks of controlling losing bets from cascading out of control. Options and forex trading require much more in the mind than in skills. Mastering the techniques mentioned below should help you in your goal:
Trading StyleEarning ObjectiveTime HorizonOther InformationPosition
More than one thousand pips
Many weeks or even months
Though the stop-loss is high, at about 100 to 200 pips, the position taken is of a small size, less than 1% of account size
Between 200 to 500 pips
Between 2 to 10 days
With a position size of about 2% of the account, the strategy comes with a 25 to 50 pips stop-loss.
Between 75 and 150 pips
Single day timeframe
Position is of about 2% to 5% of account size and there is a stop-loss of around 15 to 25 pips.
Less than 50 pips
About 3 hours max
Position sizes of between 5 to 25% of account size with a stop loss of between 7 and 20 pips.
pip = the smallest possible price change in an exchange rate
As a beginner, just aim for maximum account growth at minimal risk. The forex market is too fickle to stay down, or up for that matter, forever.
Thus, it is up to you to make an informed decision regarding whether you have it in you to go for it. Last but not the least, the market is a cruel world that shows big dreams. Remember that, when you trade forex for a living, it is your primary source of income, and it is your duty not to put it under unnecessary jeopardy.
Failure is a part and parcel of the job, so do not make losing money your final failure. If you think you have it, go for it, as the gains can be especially high.
Before you dive head first into the forex trading field, please gain adequate information about queries like, “does anyone make a living out of it” and “how much capital does one need for it.” These two questions should be enough of a reality check on your big money schemes. In this trade, beginner’s luck always wears off, and it is a sheer skill and precise market timing that will let you survive in the long run.
Leave your personal feelings out of this, especially greed, for it can be your downfall. Always hedge your risks. You can move on to taking on increased risk for reaping greater rewards, when you advance in this field.
If you already have another job, never leave it on a whim to trade forex and making big money. Apart from this, you need to have adequate financial knowledge about how these markets work, what are the different trading strategies for the same, and which is the best strategy for you, i.e., which one is in the best alignment with your income goals, investment horizons, risk willingness, and other factors. It is always best to take time out after a loss or failure, for this will help you view your mistakes objectively. Though these may reduce your upscale profit potential, these will also put a floor on your potential losses. It is true that you can earn huge amounts by trading in these markets, but it is also true that only a few highly skilled individuals actually do so, and the probability of that happening is very low. Only if you have the grit and determination to succeed despite failures and have the requisite financial knowledge and education, are you qualified to even consider becoming a full-time forex trader. Money management will also teach you to retain your winners in the “winners” category over the long run.
Always trade in currency pairs, for this will serve as a kind of hedging technique. Having a fair and level head is an absolutely essential prerequisite when you think about entering this option. Its dynamics requires great skill and timing, the ability to withstand a few blows (there will certainly be quite a few), and a hundred percent acceptance of a few extra-gray hair that you will always seem to be growing. Open positions in forex markets, especially when you have taken large positions in a single currency, leaving you with very heavy risks of potential losses, in case of adverse exchange rate movements in that particular currency.
Do a proper trend analysis to know your entry and exit positions. Exiting positions at the right time is the only thing that will make you money. As a beginner, you can only play it low and safe, till you gain the absolutely essential exposure and experience to become a pro. If you thought that this job entailed just a few hours in front of your computer, expertise in a few technical analysis tools for trend analysis and statistical probabilities, and a secure means of steady income flow, you couldn’t be more wrong. Know who your friends and advisors are, and check their background track records before you follow them blindly. If it is the risk you crave, you have other, marginally safer, (and easier to learn) options like stocks and futures trading. Waiting for higher gains that may never materialize is a common folly. Till then, make it a secondary job, parallel to your primary one.
Learn all the possible money management skills, for they are absolutely essential for survival in this rough and tough field. Trust your intuition and experience.
Great successes can only be based on proper defenses. Gain experience and exposure first. If that probability in itself is low, you can just imagine how low the probability of that happening on a regular basis is; think about it.
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If you are considering trading forex for a living, here’s a word of caution for you. Granted that the filed has scope for big money, but like all other things we do for a livelihood, this too has some pros and cons. If you think you have what it takes, read the following paragraphs that will take you a step closer in learning it, like a pro.
Prerequisites to Enter These Markets. These are followed by some tips to help you trade forex and make it your primary, full-time job.
Your trading game plan should be based on one of the following strategies or should be a combination of them