Tips and tricks of succeeding in Forex
SEE ALSO :Forex exchange reserve drops, CBKYou need to have a prudent lot size so you can trade for a longer period that’s more sustainable. 4. Understand the market There are three areas you need to understand to be a good trader: technical analysis, fundamental analysis and sentimental analysis. Technical analysis is just analysing the up and down movement of the prices. It makes you aware of the patterns of the market, which are called the highs and lows of the market. This helps you understand the history of the market, which is how the market repeats itself. In forex, history always repeats itself. There are also technical indicators that can help you predict movement. Fundamental analysis is a study of the news. You need to understand how global events will affect the market. This will help you know whether to buy or sell a currency. Sentimental analysis is behavioural. Sometimes human beings have a taste for something. That can affect price. It’s psychological. For example, people may have a feeling that this week, because of elections, there’s a currency that may lose value. These are the feelings of the markets, and they affect prices. 5. Start small Start with a small amount and progress as you understand forex trading. Discipline is very crucial. 6. Focus on one currency pair for a long period We trade currencies in pairs. When you’re buying one, you’re selling another, and vice versa. Start with one currency pair and try to understand it before you move to other currency pairs. Don’t try to trade all currencies at once; that’s indiscipline. Focus on one thing at a time. 7. Manage risk With anything financial, you need to understand the risk of the venture. For example, it is advisable to not borrow money to trade because the risk in forex is rather high. When you understand the risk, you’ll use the best lot size. Also, this way, you’ll not trade using your emotions. You will trade while focused on your plan. For example, if you’re trading $100 (Sh10,200) or $1,000 (Sh101,200), you need to have calculated how much you want to get monthly, and in the worst-case scenario, how much you’re prepared to lose. In forex, there are orders that can help minimise loss called stop-loss orders. There are also take-profit orders, which guide you in terms of how much you want to get in a day. 8. Restrain your emotions You need to have the traits of a trader, the patience of a saint and the emotions of a rock when it comes to forex. That means that if you lose money, calm down, restrategise and think about how you’ll tackle the next trade. Don’t panic and don’t be in a hurry to make a killing in a day.