What are the things to do and avoid while trading in the forex market?
If you are trading with foreign currency pairs and the difference in their values, you are into forex trading. You could make a lot of money in this and the risk of losing money is also significant. It is not difficult to find South African forex brokers. However, it could be tricky to make money out of the trading sessions. If you are a beginner in the market, you should do something and avoid something to grow your money. In this article, let us discuss these dos and don’ts of forex trading in brief.
Dos and Don’ts of forex trading
Do not gamble
Most beginners would lose their money in the forex market mainly because of their gambling approach towards the currency pairs. Since it is enough to call or put by predicting the future value of the currency pairs, they are doing it without understanding the fundamentals of the currency movement. Hence, the process works out at times and loses most of the time. If you are looking to make money in the long run, you should take care and study the basics of how the market is moving. You should analyze the past movements of the currencies and the factors in those events that caused such changes. Once you understand these past factors, you can predict the future values if the same events occur at present. Likewise, your knowledge could get you more money than the gambling approach.
You may be trading alongside your busy schedule with your main business. So, you could have meetings or other commitments that hinder you from monitoring the market continuously. Once you are not there to monitor your order, any sudden fluctuations in the market could erase your wealth within seconds. Hence, you should use the golden feature of stop-loss provided by the platform you are trading with. Stop-loss is nothing but a get-away order placed in the market to limit your loss to a particular level. For instance, let us assume that you are placing a buy order for USD/EUR at 1.2000 and the stop-loss at 1.1500. Now, even when you are not there to keep track of the market, the trade will end by selling at 1.1500 and your loss will be limited to 0.0500. This feature would help you restrict your losses even without your presence.
Know the features and their usage
You would be given a platform to trade with foreign currencies. This platform would have tons of charts, indicators, notifications, and warnings. These are nothing but the features of the platform that would guide you to success. However, they would not help you directly make profits. You should take care and study the purpose of each tool and feature. Then, you should use them to your advantage to make money with successful trades.
Avoid getting emotional
It is a blunder to get emotional for your upsides and downsides while you are trading. It could lead you to losses.