Foraying into the world of foreign exchange and trading can be an attractive idea to entertain because of the possible profits that one can gain and the impact it has on the market. However, it is not as simple as the movies may make it seem, and there is a lot of market monitoring and study that go into finding the best route to keep you in the black. It is not an impossible industry to permeate, though, as long as you have the right resources and know-how.
Here are some pointers for beginners who are only starting to dip in:
Find a trustworthy broker
First, know the difference between Straight Through Processing (STP) and Electronic Communication Network (ECN) brokers because the way they deal is different. That is the key to note, depending on what your goals are. You want to make sure that you avoid a broker who works against you in favor of the market. If you read up on ECN-specific brokers like Fair Forex, you’ll find that it’s more forgiving for newbies because of the way ECN routing provides diverse liquidity and a consistent quote throughout the execution of services.
Always keep a record
A vital action that you should do consistently is to keep records of everything, even going so far as having physical documents as well as digital copies. Doing this allows you to monitor all of your data, exits, highs and lows, and targets. This way, you can more accurately assess which investments are still profitable and what trajectory will lead to profit or loss. It’s also generally a good measure to keep a reference in case of sudden shifts that you need to recover from.
Don’t go all-in at once
It’s tempting to go big or go home, but foreign exchange requires strategic planning and entries little by little so that you can build up and sustain. The forex trade comes with its risks, and with fluctuating markets, it’s no small factor. It’s not just about making the right trading deals but also about knowing how much to allocate depending on your objectives. You may be putting all your money into a few trades that end up making you lose entire accounts in the end.
Be strategic with your risks
It’s best not to keep all your eggs in one basket. Employing a good strategy would also depend on how your broker works things out for you, but you’d also want to make sure that you are not stagnating. That’s why part of the deal is considering risks and benefits, then seeing which ones to pursue in the long run. Though you may have a target profit for a set time, you need to assess whether you have computed things well without completely falling behind to keep your profit moving.
Put a stop-loss in place
It is one of those steps that you need to take for security so that if that margins change and you end up being at risk of a major loss, you can end up selling at a specific price point. That is often done with your broker, so make sure that when you seek out the right broker, you discuss this order before starting any trades.
With these suggestions, you should have a little more knowledge in your pocket that can help you make smarter choices in forex exchange. But it always does well to read up some more and take your time.
