FOREX Trading Philosophy
Keen on starting FOREX trading? Why would you not be? Many beginning FOREX traders are captivated by the allure of easy
money. FOREX websites offer 'risk-free' trading, 'high returns' and 'low investment' - these claims have a grain of truth in
them, but the reality of FOREX is a bit more complex. As with anything in life, what you put in will determine what you get out.
There are two common mistakes that many beginner traders make - trading without a strategy and letting emotions rule their
decisions. After opening a FOREX account it may be tempting to dive right in and start trading. Watching the movements of
EUR/USD for example, you may feel that you are letting an opportunity pass you by if you don't enter the market
immediately. You buy and watch the market move against you. You panic and sell, only to see the market recover.
This kind of undisciplined approach to FOREX is guaranteed to lose you money, and have you waste your time. FOREX traders need
to have a rational trading strategy and not allow emotions to rule their trading decisions.
The two emotions prevalent in the above example is greed (entering the market immediately) and fear (selling when the
market temporarily moves against you). Investing and these two emotions do not gel at all. Keep them out of your trading and you will see results.
To make rational trading decisions the FOREX trader must be well-educated in market movements. He must be able to
apply technical studies to charts and plot out entry and exit points. He must take advantage of the various types of orders to minimize his risk and maximize his profit.
The first step in becoming a successful FOREX trader is to understand the market and the forces behind it. Who trades FOREX
and why? Who is successful and why are they successful? This knowledge will allow you to identify successful trading strategies and use them as models for your own.
There are 5 major groups of investors who participate in FOREX - Governments, Banks, Corporations, Investment Funds, and
traders. Each group has varying objectives, but the one thing that all the groups (except traders) have in common is external
control. Every organization has rules and guidelines for trading currencies and can be held accountable for their trading
decisions. Individual traders, on the other hand, are accountable only to themselves.
If you do not keep yourself in check, nobody else will. Why should they worry if you aimlessly waste your money?
This means that the trader who lacks rules and guidelines is playing a losing game. Large organizations and educated traders
approach the FOREX with strategies, and if you hope to succeed as a FOREX trader you must play by the same rules. That is studying
these strategies and rules before starting to trade is so important.
FOREX Trading Philosophy - Money Management
Money management is part and parcel of any trading strategy. Besides knowing which currencies to trade and recognizing entry
and exit signals, the successful trader has to manage his resources and integrate money management into his trading plan.
Position size, margin, recent profits and losses, and contingency plans all need to be considered before entering the market.
This may sound like Greek now! If it does, you have more reason to get to know these terms. Knowledge will empower you on any investment market, including FOREX.
There are various strategies for approaching money management. Many of them rely on the calculation of core equity. Core equity
is your starting balance minus the money used in open positions. If the starting balance is $10,000 and you have $1000 in open positions your core equity is $9000.
When entering a position try to limit risk to 1% to 3% of each trade. This means that if you are trading a standard FOREX lot of
$100,000 you should limit your risk to $1000 to $3000 - preferably $1000. You do this by placing a stop loss order 100 pips (when 1 pip = $10) above or below your entry position.
As your core equity rises or falls you can adjust the dollar amount of your risk. With a starting balance of $10,000 and one
open position your core equity is $9000. If you wish to add a second open position, your core equity would fall to $8000 and
you should limit your risk to $900. Risk in a third position should be limited to $800.
By the same principal you can also raise your risk level as your core equity rises. If you have been trading successfully and
made a $5000 profit, your core equity is now $15,000. You could raise your risk to $1500 per transaction. Alternatively, you
could risk more from the profit than from the original starting balance. Some traders may risk up to 5% against their realized
profits ($5,000 on a $100,000 lot) for greater profit potential.
As you can see, the novice needs to get through quite a bit of education, understanding and planning before those 'risk-free'
trading, 'high returns' and 'low investment' promises will come into play. What are you waiting for? Get yourself a decent FOREX
Trading Education. If you need more information, feel free to visit http://www.investing-smarter.com.
Dries Cronje has a BSc (Actuarial Science) degree and is currently studying to be an actuary. He has worked as an Actuarial Consultant for almost five years.
For more information, please visit http://www.investing-smarter.com
forex currency trading news updated
Sun. September / 15 / 2019
Forex Forecast: Pairs in Focus DailyForex.com
Get the Forex Forecast using fundamentals, sentiment, and technical positions analyses for major pairs for the week of September 15, 2019 here.
A peep into the world of foreign exchange Daily Nation
You may have heard about online trading in foreign exchange, also known as forex. You are also likely to have heard about how profitable this venture is.
Mugenda: How I landed into forex trading The Standard
Mr. Paul Mugenda, a forex trader based in Nairobi (PHOTO: Courtesy) The need to cope with the rising living standards has led many Kenyans into different ...
CBK's warning over online forex traders Standard Digital
The Central Bank of Kenya (CBK) has warned members of the public against dealing with unlicensed and unregulated online foreign exchange dealers.
Forex Trading for Beginners Yahoo Finance
Forex trading can be an exciting and lucrative activity, but it can also be tough, especially for beginners. Newcomers underestimate the important of financial ...
Currency Trading for Beginners Benzinga
If you're new to currency trading – look no further. FOREX.com is one of the world's largest forex brokers. Account holders get competitive pricing, award-winning ...
Never lose hope in currency trading business Rocky Mountain Collegian
Sponsored *Content*: Never lose hope in currency trading business A good trader will know about the right kind of performance in the business. It is very.
How to Start a Currency Trading Business Virtual-Strategy Magazine
Thinking on how to start a currency trading business? Then you are in the right place. Currency trading remains the largest financial market in the world.
Is forex trading profitable? Capital.com
Want to learn how to make money on forex? Find out the major factors to consider and learn how to profit from forex trading.
Forex Trading Philippines Benzinga
If you live in the Philippines, trading in the forex market has its own set of rules. Learn how to trade, and the best forex brokers to use for 2019.
Best platform for Forex trading Augusta Free Press
Forex or as most people know it, foreign exchange, is a decentralized world market where people can trade, buy or sell currencies.
Retail forex trading set to go live today Economic Times
Mumbai: A new retail currency trading platform goes live today enabling thousands of small businesses to trade at market prices, possibly ending years of ...
FX Trading - Currency Trading FXTM
Discover the details of foreign exchange, currency trading, currency pairs, forex market hours, forex trading fundamentals, trading signals and more. | FXTM ...
Why Forex Trading is growing 7NEWS
It might come as a surprise that foreign exchange is not a 'relatively' new means of trading. Here are some reasons why retail forex trading is growing.
A Detailed Look at Forex Trading Kalkine Media
In simple terms, forex trading, is the currency trading. It is one of the most liquid and traded financial markets in the world, with transaction volume exceeding $ 5 ...
Yen Struggles for Traction DailyForex.com
The Japanese Yen continues to flirt with a 6-week trough against the US Dollar as hopeful indications that China and the U.S. were moving closer to an ...
Forex Trading – What You Need to... Forex Crunch
Forex trading is popular with many people because you do not need to make a large investment to get started. However, while it's certainly possible to.
Investor’s Manual: What Is Forex? The Ticker Tape
The foreign exchange market (forex) allows investors to trade two currencies against each other. Forex rates are what it costs to exchange one country's ...
Forex Trading: 5 Best Tips for Beginners - VENTS Magazine
A lot of new traders enter the currency market daily. Trading in Forex market is exciting, efficient and offers exceptionally high liquidity. Forex trading profits can ...
Forex Trading Tools Benzinga
FOREX.com is one of the world's largest forex brokers. Account holders get competitive pricing, award-winning customer *service*, actionable data and powerful ...