4 Easy Tips to Help You Make Money Trading Forex`
Although the Forex market is an exciting prospect, the number of people losing money in this financial market is staggering. Only about 30% of retail traders make a decent living from fx trading, mainly due to patience and consistent trading methodology.
Millions of traders are heavily invested in this market, and with the right set of tools and an effective strategy, anyone can make money trading forex. This financial market has been steadily expanding for the last decade and with the inclusion of cryptocurrency and CFD trading, it now offers a more diverse portfolio for multinational corporations and retail traders to make money.
The fundamental question, however, is, how can you make money trading forex? And how can you control risk to a point where you don’t lose your entire investment portfolio before you make your first real profit?
Here is a list of practices used by expert traders to maintain a winning streak.
How to Make Money Trading Forex
Turn Initial Profits into Trading Capital
As a new trader, always ensure you control your risk by staking no more than 1% of your investment portfolio on a single trade. The assumption here is that you do not have a lot of capital to turn day trading into a career, so your disposable income should be spread out across a series of trades.
You are playing it safe here. The idea is to establish a system, build a portfolio, then use the string of small profits to increase your capital.
It will take time before you can put $1000 on the line without breaking a sweat, therefore, it is critical to ensure you monitor the prize. As a beginner, you need to operate from a position of minimum risk.
Risk assessment and management are the most effective ways to build your trading career and develop a solid strategy. Once you have accumulated enough capital to take a big step and are confident in your strategy, you can begin trading with the big boys.
Remember to maintain the 1% rule, regardless of how much capital you have. Essentially, if you have $100000 in your trading account, limit your stake to $1000. Very few people make money by blowing their life savings-play it safe.
Focus on Current Events
Most people are so hung up on charts and price trends that they forget other more critical influencing factors in fx trading. Whether you are trading long-term or day trading, ensure you are keen on news wires covering anything from political relations to public opinions.
You don’t have to go into financial records or quarter performance indices, a simple piece of negative publicity can plunge a commodity into depression. Consult industry experts on the news items that can affect an asset’s market value, and then keep an eye on news items that have financial all political implications.
Consistency, Commitment, and Patience
Like any other business endeavor, nothing comes easy. This fact is accurate in fx trading. Over 90% of new traders give up within the first year, some losing their entire portfolio in the first quarter. Forex trading is a gruesome process that needs persistence and commitment.
Traders who have made fx a full-time career will tell you to dedicate a lot of time, capital, and discipline to financial markets. It may take you up to 2 years to develop a trading schedule, strategy and get a streak going. Without the right blend of diligence and commitment, forex trading will consume you and leave you broke and stressed.
That said, it is profitable, and new traders have made hundreds of millions trading forex over a period of less than ten years. Try to transact regularly, develop a strategy that works for you, and most importantly, don’t give up.
Proper Money Management
Greed is the one trait many traders have that plagues the fx market. A lack of emotional detachment causes many investors to make costly decisions that result in huge losses. Diligent money management is quite similar to exercising. Starting is easy, but maintaining a proper money management plan in the long term is laborious.
Try to manage your capital by assessing risks and staying away from leverage. Proper money management is critical, especially at the beginning stages, as it allows you to be more precise with individual trades.
Always operate on the 1% rule to ensure the risk is negligible.
Forex trading is not as complex as many people think. All you need to do is develop a strategy based on an evaluation of market forces. Although the trading journey can be discouraging, it will be worth it once you become an expert trader.