Everyone knows Forex trading is one of the most profitable business in the world. Even the large banks and institutions are involved in trading since it allows them to make a decent profit by using the market leverage. But what about the retail traders? Do you think they are able to make a huge profit in this market? Sadly the majority of the rookie traders are facing an extreme level of difficulty in this investment business. According to recent statistics, more than 90% of the traders are losing money on regular basis. In today’s article, we will share some of the golden rules of investment business. If you can follow this rules, you will feel the change in your trading performance within a very short period of time.
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Table of Contents
Stop trading the new highs and lows
The new traders always love to trade the new highs and lows. But these are the riskiest zone in the trading industry. The market either retraces back or exhibit extended movement in such market conditions. Even the experienced traders find it really hard to trade such conditions. In order to reduce the risk exposure, you need to focus on market retracement and the existing trend. You should never execute any trade against the prevailing trend. This is the only way by which you can reduce the number of losing trades.
Stop trusting other people
Trusting the expected trader is another big mistake made by the novice traders. Just after becoming an active member in the exchange traded funds community the rookie traders start following other people advice. You need to understand one simple fact, the outcome of each trade is completely random. You might have a master degree in economics yet it’s impossible to predict the price of a certain asset with 100% accuracy. For this very reason, the expert traders consider this profession as a state of art.
Never fear to close your losing trades
Closing your losing trades at the right time is extremely important for your success. The new traders don’t really understand why they should close a trade. They stick to their losing orders and make it big. At one point they often blow their account. This is where the professionals are one step ahead. The moment they understand the trade has gone wrong they close their trade without giving a second thought. Such prompt action is very crucial for your long-term success in the investment industry.
Information is power
In the world of economic crisis, information is considered to be a most powerful asset in the investment business. Always be alert so that you don’t miss any major news release. Keeping yourself tuned with the fundamental factors of the market is one of the key ingredients to saving your investment. In fact, fundamental analysis is the only way by which you can secure big winners in this market. So don’t think you will only learn technical analysis and become a successful trader. Work hard to know the impact of high impact news on major currency pairs.
Adapting to the changes in the market
We all know the famous proverb trend is your friend. But do you really think all trends are absolute? Even the major currency pairs change its trend from time to time. High impact news release like NFP or FOMC statement can easily change the market trend. As a currency trader its highly imperative you know when the market has changed its trend. But you should never trade with fresh trend unless it exhibits higher highs or higher or lower highs. Some of you might say identifying the market reversal is extremely hard but in reality, it’s really very simple. Just use the simple trend line tools and asses the fundamental factors of the market. If you still feel confused, seek help from expert traders. It won’t take time to understand how to spot the perfect reversal in any market.
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