Trading in the Forex market can be very lucrative for the patient and disciplined trader. However, it can also be the worst investment nightmare for the rash trader who trades on emotion and does not conduct proper analysis or use the appropriate risk management strategies. The best thing for a trader is to adopt safe trading habits right from the beginning of his or her Forex trading career/investment.
The top 7 safe habits for a Forex trader are:
Control Your Greed
There is nothing wrong with wanting to make the highest profits possible in the shortest time ever. The problem can only be in how you achieve this. To ensure that greed does not take over your forex trade decision-making, the trader should avoid making up fictitious market conditions. Trade on what is there on the charts and in your properly-done analysis. Do not attempt to push profit targets beyond price support and price resistance levels. Miracles do not come in plenty in the forex market. For the same reason, do not hold on too long to losing trades.
The market has always been there and will always be there. You do not need to hold so many positions like it is going anywhere. This will only serve to confuse you and leave you no opportunity for proper analysis and proper management of your trades. A better strategy would be to patiently wait for opportune market condition then place just one trade and manage it well. Do this again and again and you will find yourself gaining consistently.
To avoid losing your investment, only trade using 2-6% of your total trading capital. Avoid using leverage of more than 1:100. This will help you withstand losses and avoid margin calls.
Get High Speed Connection
You are trading on real time and hence you need price and market data getting to you as quickly as possible. You also need to be making your executable market orders fast to take advantage of Forex events. Without a high speed internet connection, all this is not possible.
Have a Trading Schedule
The forex market is a 24 hour market, but that does not mean you should trade all the time or just any time your whims want you to. Follow a strict schedule that takes advantage of periods of high liquidity and high trade volumes. These periods include immediately after the opening of financial markets, just before the closing of financial markets, and when the trading sessions of the major markets overlap.
Wisely Choose Your Brokers
Forex brokers are a dime as dozen. Only go with genuine, regulated, duly registered, experienced brokers. This ensures that first, disputes will be rare. Second, disputes will be handled speedily and transparently. Third, disputes can be mediated by an authoritative third party. Click here to read a review of some of the best brokers in the market.
Close Open Positions before High Impact News Releases
There are news events that always have an instant high impact on forex prices. Unfortunately, it is always very difficult to predict how Forex traders will react to any news event before it happens. To safeguard your forex account, always close all open positions when there is any expected news that has the potential to impact heavily on currency prices.
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