First Learn and then remove L Just because forex is simple to get into doesn’t mean that very careful accounting review can be ignored. Learning about forex is an important part traders success in the forex markets. While most learning comes from live trading and experience, a trader should learn everythingpossible about the forex markets, including the (related to how land, rivers, etc. affect a country’s rules and relationships) and money- based factors that affect a traders preferred types of money. Learning is a (happening now) effort as traders need to be prepared to change to fit changing market conditions, rules and worlds event. Parts of this research process involves developing a trading plan. Use a Practice Account Nearly all trading platforms come with a practice account, sometimes called a simulated account or demo account. These accounts allow traders to place possible trades without a paid for account. Perhaps the most important benefit of a practice account is that it allows a trader to become good at order entry ways of doing things. Few things are as damaging to a trading account (and a trader’s confidence) as pushing the wrong button when opening or exiting a position. It is not unusual and amazing, for example, for a new trader to accidentally add to a losing position instead of closing the trade. Multiple errors in order entry can lead to large, unprotected losing trades. Aside from the devastating financial implications, this situation is incredibly stressful. Practice makes perfect: experiment with order entries before placing real money on the line. Keep Charts Clean Once a forex trader has opened an account, it may be tempting to take advantage of all the technical analysis tools offered by the trading platform. While many of these indicators are well-suited to the forex markets, it is important to remember to keep analysis ways of doing things to a minimum in order for them to be effective. Using the same types of indicators – such as two volatility indicators or two oscillators, for example – can become unnecessary and can even give opposing signals. This should be avoided Any analysis ways of doing things that is not regularly used to improve trading performance should be removed from the chart. In addition to the tools that are applied to the chart, the overall look of the workspace should be thought about. The chosen colors, fonts and types of price bars (line, candle bar, range bar, etc) should create an easy-to-read and understand and explain chart, allowing the trader to more effectively respond to changing market conditions. Protect Your Trading Account While there is much focus on making money in forex trading, it is important to learn how to avoid losing money. Proper money management ways of doing things are an important part of successful trading. Many veteran traders would agree that one can enter a position at any price and still make money – it’s how one gets out of the trade that matters. Part of this is knowing when to accept your losses and move on. Always using a protective stop loss is an effective way to make sure that losses remain reasonable. Traders can also think about using a maximum daily loss amount beyond which all positions would be closed and no new trades initiated until the next trading session. While traders should have plans to limit losses, it is equally essential to protect profits. Money management techniques, such as utilizing trailing stops, can help preserve winnings while still giving a trade room to grow. Start Small When Going Live Once a trader has done his or her homework, spent time with a practice account and has a trading plan in place, it may be time to go live – that is, start trading with real money at stake. No amount of practice trading can exactly simulate real trading, and as such it is vital to start small when going live. Factors like emotions and slippage cannot be fully understood and accounted for until trading live. Additionally, a trading plan that performed like champ in back testing results or practice trading could, in reality, fail miserably when applied to a live market. By starting small, a trader can evaluate his or her trading plan and emotions, and gain more practice in executing precise order entries – without risking the entire trading account in the process. Use Reasonable Leverage Forex trading is unique in the amount of leverage that is afforded to its participants. One of the reasons forex is so attractive is that traders have the opportunity to make possibly large profits with a very small investment – sometimes as little as $50. Properly used, leverage does provide potential for growth; however, leverage can just as easily amplify losses. A trader can control the amount of leverage used by basing position size on the account balance. For example, if a trader has $10,000 in a forex account, a $100,000 position (one standard lot) would utilize 10:1 leverage. While the trader could open a much larger position if he or she were to maximize leverage, a smaller position will limit risk Keep Good Records A trading journal is an effective way to learn from both losses and successes in forex trading. Keeping an account of trading activity containing dates, instruments, profits, losses, and, perhaps most essential, the trader’s own performance and emotions can be incredibly beneficial to growing as a successful trader. When periodically reviewed, a trading journal provides important feedback that makes learning possible. Treat Trading As a Business It is important to treat forex trading as a business, and to remember that individual wins and losses don’t matter in the short run; it is how the trading business works over time that is important. As such, traders should try to avoid becoming overly emotional with either wins or losses, and treat each as just another day at the office. As with any business, forex trading incurs expenses, losses, taxes, risk and uncertainty. Also, just as small businesses rarely become successful overnight, neither do most forex traders. Planning, setting realistic goals, staying organized and learning from both successes and failures will help ensure a long, successful career as a forex trader.