How not to lose money in Forex?
How not to lose my money in Forex?
That's the right type of question every Forex trader should start with.
Here are the rules:
- Start with a mini account and a mini lot
Why? Every beginner Forex trader goes through the first psychological challenge of making first trades. There is a whole mix of emotions, but most importantly there is real money involved, and no one wants to lose real money.
It is very important to leave through your first experience unharmed. You should risk very little at first, this will take off the pressure of making first trades.
Important: with a mini accounts of under $500 you should trade no more than 0.01 lot. Otherwise, there is 95% chance to lose your first account!
- Have a trading system
..Not just any system, but the one which eliminates any misinterpretations and double meanings of entries, exits, stops etc. Avoid systems that call for using intuition or act upon common sense, or use own judgment according to the situation.
The best systems are the ones you make yourself, or, if you start with an adopted method, you should, at least, put an additional work into it.
Polishing a system takes months, but once perfected, it adds tons of confidence into a trade.
- Learn to be break-even on every trade
Ability to protect your starting capital is paramount. Break-even trades are great, since you lose nothing. When you learn how to be break-even, you will be able to make a so called "free trades" - a trade, where a stop loss is set to break-even and a position is allowed to run for maximum profits.
- Trade during active market hours only
Although Forex market is open and can be traded 24 hours a day, the most active market hours are from 3am EST to 5pm EST. Avoid trading during other hours, there isn't much to earn there, but there is plenty of opportunities to make losing trades.
- Avoid trading during news time
Check Forex Economic Calendar and avoid news hours. Try to avoid trading 20 min before the news and 20 min after the news. News trading is one of the riskiest adventure. Always look back at possible losses before admiring possible profits.
Not every Forex broker offers perfect trading conditions during news hours, make sure you know the policy of your broker.
- Don't over trade
Don't trade too much. You won't be able to make more money than Forex market is willing to offer.
Don't compromise your trading system. If a trading setup is not perfect, don't take a trade.
- If you start to lose - stop trading
If you begin to lose, it is better to make a pause. It is either your fault and lack of discipline, or there is a change in the market behavior and your system can no longer produce results. In any case pausing helps.
- Practice, learn, improve
Always continue researching, learning and working on your system rules, your discipline and your risk appetite.
Most importantly: don't think about quitting your day job. It is a very high goal, which may put a pressure on you to start earning money in Forex faster than you would normally do. Take you time, learn, test.
Good luck!
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Excellent advise ...especially "Most importantly: don't think about quitting your day job. It is a very high goal, which may put a pressure on you to start earning money in Forex faster than you would normally do. Take you time, learn, test. "
I wholeheartedly agree with the above post. All these examples are perfect for the beginner. I wish I followed these rules when i first entered Forex. It would saved me lots of $!
Many time , I think of quitting my day job, concenrate on forex. I don't have time to trade when I am working , moreover, I will be very tired after the day work .
which indicator would you advice a beginner to make use of? and do ouu have any advice with respect to such indicator usage?
This is so wonderful and wish had read this when i started
Well said all is not lost
Good one for beginers
THANKS FOR THE WAY YOU ANSWER QUESTIONS IT'S GREAT BUT I HAVE A LITTLE PROBLEM TRYING TO UNDERSTAND HOW PIVOT POINT WORKS. AFTER SETTING IT DO YOU HAVE TO GO AHEAD AND TRADE IF YOU ARE USING 15 MINUTES TIME FRAME CHART?
OMG I should have read this. Now only regret comes.
Excellent advice
I've been practicing on a forex demo account 6 hours a day for 1 year, and all I do is hemorrhage money left, right, and center. I am convinced now that technical analysis is a complete waste of time. The forex market always does the complete opposite of what seem intuitive and probable based on thorough analytical techniques. But simply "doing the opposite" like George Costanza on Seinfeld also doesn't work, because the forex market will respond by doing the opposite of the opposite. Whatever you decide to do, the market will swing violently in the opposite direction. Nothing works and nobody makes any money on forex. Plenty of people (like me) study technical and fundamental analysis to such an extent that they become virtual experts in the subject despite being lousy traders. That's why there is so much fucking advice online. Everyone has studied forex trading so devoutly that they've earned an honorary PhD in the subject, but they still can't make any money. The reason is that forex is absolutely random. If you want to get a better picture of where the price is going to go, scroll your price chart all the way over to the left so that you can't see any of the preceding data. What do you see? Well, you see a single candelstick and a vast, empty fronteir in front of it. Where's it going to go? Anywhere.
Actually, it is going to go in one of two directions: up or down. So if you want to improve your trading, flip a fucking coin each time you enter an order and your odds of success will be 50/50 minus the spread intstead of 99/1 if you waste your time putting effort into it. I fucking HATE forex. So do you. It's not that I suck at it. I know for a fact that NOBODY makes money trading. I've taken courses and the experts themselves never once demonstrated consistently profitable trades. In fact, they lost most of the time, but this didn't stop them from utter bullshit like "losses are part of trading." The truth is, losses are not part of trading, they're all there is to trading.
Good strategy is necessary. Take early losses and let the profits run. You don't make money by trading, you make money by waiting. Patience is a good virtue, when trading currences. Trade the odds. The strange thing in trading is that if something is too good to be true, it probably is. Trade what you see not what you think. When in doubt, wait it out. Put Take profit and stop loss orders to prevent irrational behaviour. Only 15 % of the price action is tradable. Buying or selling the market is dangerous. Try to enter the market only with limit orders. Read the financial media at least 4 hours a day. Read the financial literature. Think fundementally, and trade technically.Luck comes to the prepared mind. If facts and reasonings are right, you don't have to worry about anything else.Do not react, profits go to those who act, not to those who react. Do not expect quick profits, let the trade to mature. Try to be a contrarian, don't follow the crowd. After taking good profit, take a trading break, that's the time when I usually lose my common sense.
sir how to place take profit and stop loss what is the ratio to place the tp and sl
Sir where we have to take decision on the candlestic formation 1 minute 5 minute 15 minute 1hour which time frame chart we have to fallow when we are observing the candlestic formation
sir how to become a professional trader and how to master the candlestics
Thanks for the tips