Trading the foreign exchange market (FOREX) can be so rewarding and at the same time detrimental if not done according to set rules.
An unruly person can find his way to success in any field of endeavor, but when it comes to forex trading, its a different
ball game entirely.
Trading successfully is 99.99% impossible without some set of rules to always put into consideration while trading.
RISK MANAGEMENT COVERS 70% OF YOUR TRADING SKILLS.
the following are important TIPS that would enhance our success rate in trading
- ONLY TRADE THE MONEY YOU DON’T NEED
This is because it is possible to lose all your trading capital, and secondly, because trading with the fund you live on will add extra pressure and emotional stress to your trading, you could in turn compromise your decision-making abilities and increase the chance of making mistakes.
- ALWAYS USE STOP-LOSS AND PENDING ORDERS
There are three reasons you should set stop loss:
- its just common sense to protect your downside
- Your mindset is safe as you can leave your trading screen knowing there is some degree of protection in place
- The process helps you sense-check trading against your plan.
- THINK ABOUT YOUR RISK TOLERANCE
Before you start trading, you need to consider your RISK tolerance which is a function of:
- Your Age
- Your knowledge of forex trading
- Your level of experience
- How much you are willing to lose
- Your investment goals.
- SET YOUR RISK/REWARD RATIO TO A MINIMUM OF 1:2: knowing about Risk/Reward will definitely improve your chance of becoming a profitable trader in the long-run
- CONTROL YOUR RISK PER TRADE
- KEEP YOUR RISK CONSISTENT: Most beginners will increase the size of their positions as soon as they’re making profits which is one of the best ways to get your account wiped out.
- UNDERSTAND AND CONTROL YOUR LEVERAGE
- TAKE CURRENCY CORRELATION INTO CONSIDERATION
Wishing you success in your Trading career