6 Tips Every Forex Trader Should Know

The career of many Forex traders starts suddenly without the right advice and the right forex strategy. These Forex trading tips will give you a solid foundation for building a winning strategy and reach your profit goals.

Use Forex Profit Calculator

You must anticipate things on ever-changing Forex markets, especially in volatile periods. To be a step ahead and predict the outcome of your trade, use a Forex profit calculator. It helps you better understand your trades before placing the order.  

We give you an example of a profit calculation below if you happen to have an account with the case currency in USD.

 The current rate for the pair EUR/USD is 0.9516/0.9522 . And let’s say you decide to sell 10,000 EUR at 0.9516. This means you sold 10,000 EUR and bought 9,516.00 USD (10,000 EUR * 0.9516 = 9,516.00 USD).

If after this trade the rate of EUR/USD decreases to 0.9500/0.9504 and you decide to buy back 10,000 EUR at 0.9504 (10,000 EUR * 0.9504 = 9,504.00 USD). Your profit will be 12 $.

Choose a Trading Style compatible With Your Personality 

You can opt for one of four different trading styles: scalping, day trading, swing trading, and position trading. 

Scalping is for those who are not armed with patience. They want to get in fast, get out, and keep going.

Scalpers want to make small profits, as small as a pip in Forex currency trading per transaction, but in many trades.

Day traders’ approach is similar to scalpers but requires more analisis and enough patience to occupy a position for part of the day.

If you can be patient and wait for the right trade to develop, scalping is not for you – you are more like a swing trader.

If you like to analyze the market for the long term and benefit from a fundamental analysis that requires weeks or even months to develop, position trading is more your game.

Keep Records Of All Your Trades

Making mistakes is part of learning and improving our skills.

But without recording the transactions you made, the risk/reward ratio, and the reasons you decided to make the transaction, how could you remember all of this?

The answer is to write it all down. It can be very beneficial when you take the time to go back over your previous transactions and analyze what went wrong and what went well.

You can use this information to adjust your trading style and strategy to achieve your goals.

You will easily be able to see your Forex profits and losses and how to improve your decisions.

Always Set a Stop-Loss

When you are about to learn Forex strategy as much as possible, you develop a certain level of confidence that your transactions will be successful.

But this healthy expectation of profit in Forex must be tempered by awareness that you can’t always be right.

Because of this, it is crucial always to set a stop-loss on your trades, as soon as you open them.

This protects you from catastrophic losses to your account if the market turns against you, even if you are not monitoring your position.

Know When to Walk Away

Sometimes you just know when you are out of the game. A basketball player knows when they miss the shot. A Forex trader knows this when he or she loses on the trades.

Forex trading requires not only a solid Forex strategy but also mental discipline and focus.

High-performance day after day is sometimes simply not possible. Learn to recognize when you should take retreat for a day or more.

Set a firm daily loss limit, and when you touch it, move away. There will always be new opportunities. 

Always Be Aware Of Current Events

You have to be fully aware of any news event about to occur that could affect a currency that you negotiate.

Current events can move markets very quickly. The rapid pace at which the markets evolve and the intense pressure to buy or sell can lead to high spreads and low liquidity.  

We can see massive pip movements in the Forex currency markets nowadays. These high spreads could eat into your Forex profit.

Keep an eye on your forex economic calendar, stay up to date with any events that could affect your positions, and try to keep an eye on developments that are not expected.

Conclusion

Forex has many potentials, but without the right plan, you can easily find yourself out of the game. Establishing the right mindset, risk management, trade management, and educational goals can make all the difference in your Forex profit.