When I started Forex trading, I genuinely thought I had to be trading for 24 hours, 5 days a week, and 240 days in a calendar year! Genuinely! I kid you not. I thought that was the only way you made money in the Forex Market.
Until I learned that it all depended on your strategy and the kind of lifestyle you sought to live.
HOW TO LOSE ALL OF YOUR MONEY TRADING FOREX! Traders with some experience may have heard of the term, but I guarantee you that a lot of traders don’t understand it.
That opening line may have scared you, but don’t worry, because the point of this is to learn how to reduce the risk of losing your capital.
If this week has taught me anything, it’s that you can never be too sure because you never know what’s coming or when it is coming. This past week we witnessed the US elections, and with that came volatility.
As traders, we love volatility. We love movement in a bearish or bullish direction.
Over the years, I’ve had many questions about signal providers. Do they work? Are they for everyone? How do you really measure their accuracy? And even, WHY you would provide signals?
The only reason I asked that last question over the years was because I genuinely believed that providing signals would somewhat take the trader’s focus off their own trading.
Correlations between currencies can be challenging to manage, but it’s not impossible. As long as you have a basic understanding of what correlation is and how it occurs between two or more pairs, strap in your seat belts for some excellent techniques!
Early on in my Forex journey, I would look for setups on every single pair, from the most common to the most exotic. The pairs very few traders even knew existed or cared to look at. This, of course, has a few benefits such as:
– Always finding a setup.
– Trading frequently.
– You feel more productive.
Cut your losses short, let your winners run. While this piece of advice is well known, you will find that the majority of retail traders do not put this into practice.
Instead, they hope that losses will turn into profits and cut winning trades because they fear that the market will turn against them. This type of behavior is often because of a traders psychological pitfalls.
I mean that literally. To every trader out there that thinks you place your trades for free, allow me to disabuse you of that notion immediately! IT COSTS MONEY TO TRADE. And no, I’m not talking about your losses.
When you place a trade, ANY TRADE, whether it was a mistake, a bad trade, or a good trade, your broker will either charge you a COMMISSION and/or a SPREAD. There is no avoiding this. You have to pay to play.
For years, I have struggled with the concept of full-time trading. Back in university I was keen on the idea, and I still am, the only thing is what that transition looks like.
Usually, people begin by trading part time i.e. when they can during their day or week. This means they don’t learn everything required as quickly as others who trade full-time.