Each and every Forex trader needs to not only create a trading plan and select his or her strategies but also need to prepare a money management plan, select a broker, and more. Answer these self-assessment questions to ensure that you’re on the right track.
Question #1: How Much Do I Want to Risk?
The amount of money that you’re willing to risk when trading might vary from one trade to the next, however, many professionals keep their risk percentage to 1-2% of their account balance per trade. Some might suggest basing how much you risk by looking at how much money is actually involved, although this comes down to personal preference. Risking too much can lead to a blown account balance, so be sure to give this one a lot of thought.
Question #2: Did I Choose the Right Broker?
You’ll probably form an opinion of your broker soon after opening an account. Once you need to chat with customer service about possible issues or with questions, test out the broker’s chosen platform, get a look at their fees in real action, and gain insight into any difficult policies you will either feel satisfied with your choice or feeling as if you could do better. If you think you’ve chosen a bad broker, you might want to withdraw your funds and go with another option. Of course, this is something you’ll need to seriously think about.
Question #3: Am I Really Ready to Start Trading?
If you haven’t been trading for long or haven’t started, you should definitely ask yourself whether you’re really ready. If you’ve already opened a trading account, you know whether you’re making or losing money. If you’re only considering opening one, you might not be sure if you’re ready. A few good ways to test this before risking any real money would be taking forex trading quizzes that test your knowledge or gaining hands-on practice through a demo account.
Question #4: What Are My Goals?
Sure, making money probably seems like the biggest goal for a forex trader, but you need to start with smaller, more defined goals. Remember that it isn’t all about getting rich. For example, a noteworthy goal would be to make more money than you lose, rather than to become rich. To grow as a trader and to bring in slightly more profits each month would be another good example. If you set goals like these, you’ll feel more accomplished as you meet them.
Question #5: Do I Have a Plan?
A trading plan is one of the first things a trader should develop because they provide a general outline of goals, risk tolerance, and a host of other things that should be taken into consideration. If you started trading without a plan, don’t worry – it’s never too late to come up with one. Still, it’s important to put this plan together as soon as possible and to actually follow it while trading, rather than forgetting about it.