Forex trading can work for or against you in an instant. Having suffered 3 margin calls previously probably makes me an expert on how it can work against. 😂
Thankfully we can lower our failure rate if we can simply remember these 3 points.
- Always practice proper money management. No one has a 100% rate of success in forex. The idea is to survive long enough to understand the market. Risk 50% and you need 200% to recover in the event of a loss. Risk 5% and you need just slightly above 5% to recover. The mathematics is clear.
- Be aware of major events. Forex is highly sentimental. If you are trading with leverage ( almost all retail forex traders are ), any losses will be magnified. One major event in the wrong direction may wipe up your position.
- Enter a position with an end in mind. At what price would you deem a success or a failure? Take profit and stop loss levels are not ambiguous feelings but rather a predetermined figure according to your conviction. A structured approach to forex trading allows you to review your performance systematically.
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