How to independently trade on Forex

Forex trading can be a great asset if you trade perfectly. But, if you do not select prefect Forex kereskedés, then you may lose money. Today we are going to dive into the world of forex trading.

How to start?

It is hardly possible to think up anything new, except for self-education. The most useful, in my opinion, is the reading of comments and blogs of specialists, following the tracks of specific news and situations and the market reaction to them. Reading books is useful, but should take place on the background, as an auxiliary material, expanding the knowledge base of the future trader. So, a person will always understand what is important and what is not, how the market reacts and what it leads to. At the same time from such reconnaissance, the battle immediately becomes clear whose advice is good, and who is just a master of reasoning about the past.

Even better, if your guru is a practicing trader who does not hesitate to talk about specific levels of opening and closing deals. But this is a rarity. As a rule, everyone prefers to give advice, or to trade without disclosing specific strategies. But this is already the last century, openness is increasingly welcomed. This includes various signaling services, where it is possible to copy the real trading activity of another person.

And yet this does not relieve you of the need to begin to study the entire routine process of trade and all the nuances before putting real money on the line.

Is it worth reading books? Books give more fundamental knowledge, but often there will be a problem of applying them in specific situations. In addition, it is now easy to find this or that definition with the help of search engines. So, my first advice is to find a worthy “teacher” (these can be blogs, analytics from forex brokers or even investment banks).

Further, we try to understand what the professional advises, on what factors (technical or fundamental) draws attention to what perspective marks. If his style suits you, try trading in the demo account according to his recommendations. At this stage, you do not risk money.

With what amount?

This advice is most often heard when investing in stocks, but with respect to high-margin forex trading its relevance is higher than ever: determine for yourself the amount that you can lose without threatening the financial well-being of your family. Because in fact here you can lose everything. On the other hand, high levels of leverage allow you to create very impressive orders in comparison with the capital that you have. Now at forex brokers the shoulder can reach 1: 1000, it is often extended 1: 500, and classics is 1: 100. Forex is less volatile than the stock market, so there is a higher leverage than futures (1:15) or liquid stocks (1: 2).

Do not be tempted by the fact that on a demo account you can install any amount you want. When trading, it is important to have a drawdown of the account. This is when you can “sit” losses on the transaction or a series of unsuccessful transactions. Frequent situations when a trader receives a margin-stake, and then the market turns in his direction. Possessing a large depot on the demo and small in real, you will remain in the game in the first case and get a margin-count in the second, which is the most offensive, you will agree.

If we talk about real figures, then for standard forex (I’m not talking about microforex, where lots are 10 times smaller), it should be at least a thousand dollars (at least not less than one), but at the same time trade must be either very short-term, or the minimum volumes, as forex is a high-margin market, where there can be large drawdowns.

How to choose a broker?

First of all, choose reliability and solidity. After all, this company will store your money and execute your orders. Previously, companies that provided access to Forex, in fact, were dealers, and not brokers for their customers. That is, they occupied the second side of the deal and played against their own clients. Basically, it even concerned small companies, the big ones did not sin, because of the requirements of regulation. Select a good broker for your
Forex kereskedés.

This business model still exists, but gradually fades into the past as the industry develops and becomes established. It was called a market-making model. The agency model is a more acceptable option for customers who do not want to carry money to the “kitchens”. Under the agency model, the company receives quotes from leading world prime-brokers and redirects them to its customers. Those in turn collect quotes and bids from a variety of banks.

It turns out that the task of a forex broker is to provide the trader with a convenient trading terminal and the choice of a suitable prime broker. And, of course, the collection of modest, and not predatory commission.

Now in Russia there are more and more opportunities to open an account with a foreign company regulated by very strict jurisdictions of the EU or Britain, where the best quotations of bid and ask are strictly monitored, and the issue of protecting the interests of the client and his capital is being considered. How to understand how reliable the company is?

Look at where it is registered and in which jurisdictions it is authorized to work. In Britain, the FSA is very demanding about issuing a license. In remote corners of our planet with this so far simpler.

Can I learn by myself?

Of course, without self-education anywhere. And I advise starting with an independent study. Only this way it will be possible to understand what the lecturer is telling you at paid courses or in a clever book. Roughly speaking, you can say many times that you need to buy cheap, and sell expensive, but you must for yourself form an understanding of how you determine where “cheap” and “expensive.”

And then, when you know the terminology, and the principle of action, you can most effectively listen to other people, try their ideas and approaches. The main thing is, do not let them fool your brains. You should always understand how this or that signal is formed.

And even more, you must think in this direction yourself, and the specific signal about which this or that interlocutor or strategy speaks should only strengthen your confidence in the correctness of the strategy chosen by you.

How not to lose?

Be careful and believe only yourself. You cannot do without losses, so try your best to make this loss virtual, not real. Risk real money, only having gained several months of experience of active trading on the demo account.

If you look at the market from time to time, it is better not to take up a live trade, having behind you a positive trading experience of less than a year. In addition, reading other people’s reviews and recommendations, you need to build up your own observations. That they were impartial, keep a diary of the trader.

In the end, you must come to yourself to determine your own trading style and the basic parameters of transactions. Since none, even the most successful trader, will not be able to give recommendations solely for you. Have enough funds on the account to avoid the margin-stake. Be open to new trade ideas and constantly look for them. And one more tip here – do not change the stop-loss in the direction of a larger loss.

Let this be the initial level, adjusted with the help of your trading system. So, you risk losing the battle, but continue the war and take revenge later.

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