Ok so we admit this is a tenuous link but it got your attention right? Trading forex is certainly an exciting business but every time you start trading you’re taking a risk with your cash this means it’s highly important to make sure you know a few tips and tricks before you immerse yourself in the world of forex (foreign exchange trading). With this in mind we’ve put together a list of our favourite tips to help guide you in your forex journey and, just to make it more fun, we’ll try and work in a Transformers reference or two!
Top Forex Trading Tips
Trading is Not Gambling
Although the risks in forex trading are very similar to the risks in gambling it’s important to realise the difference. To be a forex trader you need to use statistical analysis to inform your decisions and strategies. Look at past charts, create strategies based on the patterns you see and then test them against the market to see if they hold true.
Always Follow the Trend
Although in most walks of life following the trend is seen as being sheep-like in the world of forex it’s actually the smart move. If a currency is on the rise the chances are it will continue to do so for a while. So make sure you buy whilst the trend is moving upwards and sell the moment you start to see it falling.
Cybertron Has a Different Time Frame to Terra Firma
Ok that was a bit of a hard-won pun but in essence the point is true. If you’re trading in 15 minute time frames its best to look at hourly frames so you get an overall view of the trend and performance of a currency. Likewise if you’re trading in hourly time frames then you’ll want to look at daily charts to inform your tactics.
Know the Difference between Strategy and Tactics
Strategy is your plan for the immediate future and is usually a response to the current situation tactics affect the now and the immediate future. Strategy is your long term plan, and whilst partially informed by tactics you should never let them override your main strategy for that way lays the path to self-destruction. That’s why Megatron never defeated Optimus, he had great tactics but no clear overriding strategic goal.
Be Emotionless Like Megatron
What made Megatron the ultimate baddie was his total lack of emotion and when it comes to forex trading this is a key attribute you’ll want to work on. Never let your emotions fool you into making a bad trade. If you’re losing money most likely you’ll start to get desperate and start making riskier and riskier trades to try and start regaining profit. DO NOT DO THIS! Stay calm and stick to your strategy and if you can’t stay calm quit trading for the day and come back tomorrow.
Never Risk More Than 3% of Your Initial Deposit
This is a hard and fast rule. If you stick to this rule you’ll always be able to maintain some capital with which to regain your profit on another trade. 10 bad trades in a row and you’ll still have 70% of your cash safely untouched. As we said before this isn’t gambling doubling up on every bet will eventually get you a win in a ca**** (assuming you had unlimited credit!) but in the forex world it’ll most likely leave you with an empty account and a long discussion with the bank manager.
Always Test with a Demo Account
A demo account is the best way to get to know the forex world. Most decent brokers will offer a demo account on which you can test out your strategies and practice your tactics. It will help you to start to see patterns in the markets and eventually once you start making being successful you can be pretty sure you’ll have a good chance on a real-active forex trading account.
So that’s it sadly we didn’t manage to get too many transformers references in but we do think we’ve packed in some of the most important tips regarding how to become a successful forex trader. Whilst forex trading is never guaranteed we’re pretty sure that if you stick to these standard rules of trading then you’ll not go far wrong. Forex trading is fun so Traders Roll Out!
I am a copywriter and poet with a bachelor’s degree in English Language and Creative Writing. I have worked in various marketing & creative roles since 2001. My aim is to publish at least one novel before I die so far I have had 2 poems published internationally in print as well as some online. In my professional capacity I currently work for an advertising agency in London.