3030Some of the best forex trading tips that can be found online are old, yet undeniably helpful. Whether you’ve recently started your journey as a forex trader or you’re only considering opening a trading account, you should take a look at our golden trading tips below to ensure that you aren’t missing out on any crucial trading advice.
Tip #1: Limit your Risk
Limiting your losses is one of the best ways to ensure that you don’t wind up blowing your entire account balance. While some of us might feel very uncomfortable risking a lot, others start out with the idea that risking more will lead to a larger payout. It’s true that you might win big, but a couple of losses can really depreciate your account balance. Experts recommend limiting your risk to 1-2% of your total account balance for each trade. However, other advice recommends determining how much you want to risk based on how much you’re willing to lose for each specific trade, rather than using a one size fits all plan. For example, you might be willing to risk more on a trade if there is more evidence that it is a good move, while you’d want to risk less on a trade you felt less sure about.
Tip #2: Only Risk What you can Afford to Lose
First, you should never deposit money into your trading account that isn’t disposable. If money is meant to pay for bills or you need it to live on, then you should keep it in your pocket. When it comes to the amount that is actually in your trading account, you want to limit your position sizes and be careful with how much you risk. In this case, you actually need to think about how much you can afford to lose while keeping a steady reserve of cash available for trading. If you do wind up blowing your account, be sure you only replenish those funds with money you can afford to lose.
Tip #3: Stick with your Strategy
Before you even begin trading, you need to spend time developing your trading strategy, which is basically a plan that outlines the reasons why you will or won’t take a trade, what time you’ll trade, how much you’ll risk, and everything else that is important about the way that you trade. Once you’ve made this plan, it’s important to stick with it for the best results. Many beginners spend time on their plan, in the beginning, only to deviate it or completely forget about it later on. Unfortunately, trading without a plan and trying out random strategies usually leads to a loss of money.
Tip #4: Know when NOT to Trade
There will be times when the best thing to do is nothing at all. Before entering any trade, you should always make sure that evidence supports the move based on your trading plan. If there isn’t any evidence that you should enter the trade, don’t do it! Some traders feel that trading more will help them make more profits, while others can’t stand sitting back and doing nothing while their balance remains the same. The truth is that it is better to enter no trades and keep the same balance than it is to enter risky trades that will cause your balance to drop.
Tip #5: Choose the Right Broker
You need to put a lot of effort into your broker selection, otherwise, you’ll wind up paying the price later on. Keep in mind that there are many legitimate companies to choose from, but scammers are among the offers online. You also need to compare the different fees, deposit and withdrawal methods, account types, leverage options, and other specifications offered by each broker so that you can find the best option for your needs. Don’t go with the first option you see and be sure to compare at least a few trustworthy options before making a choice.