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6 Forex trading Tips To Guide You

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Forex Trading Tips You Need To Follow

When it comes to the highly volatile and equally lucrative world of forex trading, it would be wise to go into it as prepared as possible. Online trading is no endeavor to be taken lightly and should be viewed with the same seriousness one would view an actual job. Remember, if you’re successful at forex trading, you could very well call it quits on the 9 to 5 slog, and because its all online, you could then proceed to literally trade from anywhere in the world. However, before we get ahead of ourselves, let us first examine the 6 forex trading tips you need to follow.

 

1. Choose a broker

Sounds easy, doesn’t it? Well, thanks to the proliferation of online trading, there are many brokers out there, and thus choosing one can prove challenging. The important thing to be aware of is regulation – you want to be sure that the broker you elect to trade with its fully licensed and regulated. If you’re broker is regulated, it means that they’re externally audited and can bring their license into disrepute if they don’t adhere to certain laws and practices. 

 

2. Start with a demo account

Sometimes the best financial tips are also the easiest ones. This one might sound like a no-brainer but it’s importance cannot be understated. Most licensed and regulated online brokers are more than willing to provide new comers with a demo account as well as demo money.  A demo account won’t turn you into a pro overnight but it will provide a cursory glance of what the world of forex trading is like. A demo account will simulate the trading environment and allow you to speculate on currency pairs just as one would in the live trading environment. It might also help you to decide if online trading is something you’d like to explore further. 

 

3. Stay abreast of the latest news

The money market is subject to the happenings of the real world. If something happens in one part of the world, it is likely to affect another. The same type of rules are applicable to the movements of currencies. This is why its vitally important to always be well-read on the latest happenings in the world of finance. Bloomberg, Reuters, The Wall Street Journal and CNBC are just some of the financially-driven news outlets available online. Also, it would be wise to butch up on the politics of the various countries involved – remember the main currencies are the US and CAD Dollar, the Euro, the Japanese Yen and GBP (Great British Pound) – so make sure you know what their leaders are up to. Global news and events are key!

 

4. Check your emotions at the door

Money flows, that’s why they call it a currency. We’re immensely reliant on it for our survival. Is it any wonder then that money has the ability to affect our emotions? When you start trading , the potential for a massive gain can be equated by a loss.  Trading requires dedication and discipline and part of that discipline is your ability to keep a cool head and not make any rash decisions. For instance, if you’re dealing with an extremely volatile or unexpected market, lower your risks and your expectations. That way, you live to fight (trade) another day. 

 

5. Use automated trading software

Automated trading software, also known as a forex trading robot, can be of a great assistance.   Trading software can be beneficial to both novice and seasoned traders especially if you want to attain success when trading American and Canadian Dollars. The fact that these pairs are commonly traded means that your trading software will have lots of accumulated and historical data to implement.  Trading software removes all emotions from the picture, allows you to trade on multiple accounts, and prevents you from over-trading.

 

6. Set aside a budget and stick to it

Put aside a fixed amount of cash that you’re not just prepared to trade with, but that you’re also prepared to lose.  Forex trading can be rife with unforeseen outcomes, so you need to be prepared to take a loss.  Thus,  it would be wise to work with a fixed amount of cash.  As a rule of thumb, try and risk less than 2 percent of your entire account on a trade. To illustrate, if you’ve got $20 000 in your account and you’re prepared to risk 0.5%, then you’ll only lose $100 if things don’t go your way. 

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