Ever heard of the ‘90,90,90 rule’
This is something you’ll often hear in the financial industry. ‘90% of traders lose 90% of their money in the first 90 days’. Wow! Scary stuff if you are a trader just starting out on your Forex journey. So, what can you do to mitigate your risks and try to make sure you are on the side of victory? Read on to find out more about our top five tips every Forex newbie should know.
Study Up On The FX Market
No market is bigger than the foreign exchange market anywhere in the world, and that’s a fact. With a daily turnover of more than $6.6 trillion USD, the opportunities to earn and lose big bucks on the Forex market are huge!
So, the first thing you need to do is to start studying. There’s a ton of information on the internet, so start googling and watching youtube videos asap. It’s safe to say, if you don’t understand the finer points of Fundamental and Technical Analysis, you’ll probably fall victim to the ‘90,90,90’ nightmare. So start learning about moving averages, Bollinger bands, candlestick charts, tram lines, etc. And the best way to do that is to find a good educational provider. Learn from the pros and learn from their mistakes rather than your own. You’ll save yourself a fair amount of pain and money! Without knowing how to analyze charts, data, and trends, you’ll be at a major disadvantage.
Secondly, be in control of your emotions. It’s easy to get caught up in the heat of the moment, so be prepared to step back with a cool head and recognize when emotions or adrenalin are starting to take hold.
Practice, Practice Practice With a Demo Account!
Every regulated professional broker should provide you with a demo account. It’s there for a reason, so make sure you use it! The temptation may be to go straight in and start throwing your hard-earned bucks around, but ideally, you should place practice orders by setting up a virtual demo account. Newbie traders should spend at least six months practicing on a demo account before moving on to the real thing. If you want to learn more about how a demo account works, check out demo accounts at Activ, where there is loads of information about demo accounts and how to use them as a practice tool. Never trade with real money unless you are sure you understand the market and are confident in your trading skills. Test, test, and test again your trading strategy before opening a real money account.
Know The Risks
The Forex market can be volatile, and losses are just part of the game. Every trader loses money at some stage, but the key is to minimize your losses. Keep a cool head and avoid taking unnecessary risks or suffering large losses on a few trades in a row. If you are on a losing streak, take some time out and clear your head. Also, avoid high leveraging unless you are a super skilled trader and super confident. While you can amplify your winnings, you can also magnify your losses.
It’s better to enter trades based on possible losses rather than your dreamed-about profits, so always consider carefully your risk to reward ratio and make sure you are armed with risk-management strategies.
Also, until you get more experience, stay away from trades with a maximum loss of 3% of your money.
There are so many factors that can influence the FX market and currency values, including political, social, and economic reasons.
Make Sure Your FX Broker is Regulated
Choose your broker carefully. It is essential to trade with reputable forex brokers that can safeguard your money from cyber threats and insure them in the event of a loss. Brokers should always provide a fair trading environment for their customers, and financial authorities must safeguard traders from broker scams and fraud. Brokers who are licensed have to be transparent with authorities about their operations, making it more difficult for them to commit fraud.
In order to be licensed by a Top-Tier Regulator, a broker needs to pass numerous credibility tests, technical evaluations, and the minimum requirements for the security of traders. The authorities will keep a close eye on the registered brokers’ actions via the reporting system and come down hard on them if they are found guilty of any wrongdoing or misconduct. Choose your broker wisely, and make sure they are a tier 1 operator, and you can trade in full confidence that your funds are safe from any potential fraud.
Use a Stop-Loss Order
The market can always swing against you, and if you trade without a stop loss, you are playing with fire. Use a Stop Loss order and set it up so that you never lose more than 3% of your initial investment.
A guaranteed stop-loss option from your broker will guarantee that you can get out of your trading position at the price you have fixed prior to executing a trade, even if the market suddenly moves against you.
You should ask your broker whether they provide a risk management option like guaranteed Stop Loss execution that you don’t have to pay for.
That’s it from us today on Forex. Follow those rules, and you’ll get off on a good footing. Remember, though, the best way forward is to sign up with a reputable provider. Learn to trade like a Pro from the Pros.
For more information on Forex trading for beginners and courses, get in touch with whyi today @
Written by Anthony Kent
Anthony Kent is the Director of Education at whyi learn (academy)