As with most endeavors, knowledge is essential for success, trading without an adequate understanding of how markets move can seriously damage your wealth. With an abundance of material online on the topic of Forex trading, most can be confusing and sometimes misleading. At Pro FX we can point you in the right direction.
Anytime money is at risk, the untrained trader can enter a state of either fear or greed. Not only the fear of potentially losing money but also greed, which can make you hold onto a position too long, only to turn a winning trade into a losing trade. Knowing when to exit an open trade is just as important as knowing when to enter a trade.
Knowing how much to risk on individual trades needs careful consideration. Risking too much of your account on any one trade can result in a fast exit to your trading journey. Equally, risking too little can result in poor returns. Selecting the right trade size parameters for your risk appetite is an absolute must. We have a trade size calculator that can provide an useful aid.
Once, we were asked by an attendee of one of our regular webinars, “if trading can produce £2000 per month income from a balance of £500 in a Forex trading account”. I don’t remember the exact colourful expletive I used to correct this individual understanding of trading, but did mention the fact this was the equivalent of an unrealistic monthly return of 400%. As a simple guide, your target return should be relative to the amount of drawdown you might expect to have.
Selecting a trading strategy to suit your personality is often overlooked by new traders, preferring instead to use the butterfly method of jumping from one strategy to another in search of “The Holy grail”, but never giving enough time to master one or any. The best strategies should be easy to learn, repeatable and scalable. Let us help you find out if you are an intraday trader or prefer longer-term trading or both.