For all of the risk and uncertainty attached to trading forex, it is a science. There are formulas and rules and methodologies that can help you to understand it and, perhaps more importantly, increase your chances of getting the desired result.
Here are three of the most important to get you started…
1: Choose a Trading Style that Suits Your Goals
There is no use beginning a journey without a destination in mind – not in the world of forex, at least. One of the most important things to remember is that you need a goal in order to have any hope of achieving it. It is only once you have this that you can find the trading style most likely to complement it.
Start by thinking about your risk profile – how much are you prepared to lose in order to profit? Consider, too, your strengths and weaknesses, the tools you favour, the factors you’re comfortable analysing, and so on. Write these points down, if it helps, and then compare them to the different trading approaches open to you.
Does the one that you wish to choose complement your goals? If the answer is no, then either find one that does, or consider whether they’re really the right goals for you. Once you find a combination that suits your strengths, you’re already well on your way to success.
2: Choose a Broker That Suits Your Trading Style
One of the most important considerations when choosing a broker should be whether their trading platform allows you to perform the analysis you require. Your broker must meet a number of criteria, of course, such as reputability, experience and affordability, but there are many who will, so finding the one who’s the right fit for you is the most important of them all. Take the time to really research your choices before committing to anything, ensuring that you know their policies inside out and are happy with them before your final decision is made. If you have the opportunity, be sure to take advantage of demo accounts to make sure that you’re satisfied with how the platform works and how easy it is to use. If you have any doubts at all when you’re assessing them, then they’re not the broker for you.
3: Choose a Methodology and Stick With It
Before you invest any money in the world of forex, you should already have selected an appropriate methodology. You need to know prior to entering any trades how you will make the decisions needed to execute them, the information you’ll require, and how you’ll decide when it’s time to enter into and exit from them. There is no right or wrong answer when it comes to deciding; you simply need to find the method that works best for you. However, there is still one golden rule that you must not flout; always be consistent in your application.
Follow these rules, and you may very well find yourself on the path to forex success.