Things to keep in mind for Forex traders
There is plenty of risk involved in trading on just about any market. Hostile conditions can leave you high and dry if you do not have the knowledge required to get out of a risky position at the right time. On the other hand, over-reaction to a temporary situation can put you in an equally tough situation, so it is worth keeping some things in mind
- Firstly, remember that you are trading with borrowed money. Before you make your first real trades, open a demo account and use that to test your instincts. Once you are making profits consistently you can switch to trading real money – and will be much less likely to lose it. If you have encouraging early results, do not be tempted to jump right in – this is not the time for high risks.
- Be consistent. It is easy to get carried away if you feel that a position is destined to bring you a profit. You may think inwardly that you have a stop-loss point of no return, but when the currency hits that price you flinch and convince yourself that it is coming back up. You might as well not have set the limit in the first place, then. Have realistic targets and stick to them.
- Choose your broker wisely. There are some Forex brokers who use legally or morally questionable tactics to guarantee a profit and there is no-one they will not sell out – yourself included. Ask around for tips, and follow the advice that keeps coming up.