What I wish i had known before trading Forex…
Unlike stock markets, the Forex markets are the true epitome of a traders markets where both the hard and soft skills of traders are tested in depth. The fast paced nature and fluctuation coupled with deep liquidity make for exciting times.
Forex markets are open 24/5 unlike stock markets which are active and liquid only during NY and London sessions.
Here are the few things I had known before diving into the Forex markets :-
- Risk appetite – How much loss I am willing to take on my capital during my adventure in the forex markets. Risk should always be set out before taking a trade so that you can manage your account successfully.
- Read and read and read about markets – Contrary to what traders say about making losses first to earn profits later, I wish I had read more on daily happenings in the markets before actually trading markets. Reading gives you a sense of confidence and mental preparedness when taking on the markets. A good thing to study is the nature of each currency, their respective correlations and historical behavior patterns can lend insight into the currencies and what to look out for,
- Focus – In today’s world full of distractions, focusing can be a key quality when trading markets. A lapse of focus can open flood gates of losses, So FOCUS.
- Weekend Analysis – I wish I had religiously performed weekend analysis as this practice goes a long way in keeping your trading methodology glued. A good practice would be to read up on the upcoming news events for the week and ascertain which pairs you should be looking at in the week to gain an edge.
- Trading loss size – If losses scare you then you need to reduce you positions to an extent where they losses don’t scare you anymore, giving you the freedom to trade fearlessly. Managing losses and the risk reward ratio is one of the critical components in successful software management.
That being said, all of the above can be incorporated into starting now, we can all create a set trading schedule and structure to how we want to manage our trades.
Remember, plan the trade, then trade the plan!
Let us know your thoughts below!
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True. The internet provides us with an infinite library full of information,it’s so easy to get lost. The key for my trading is backtesting and minimising losses because when you know that your strategy is likely to work across many different timeframes in various markets; that’s what gives you the confidence to trade. I’ve not seen a really good automated backtesting mobile app yet…
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