Don’t Lose your trouser even if it is tight ...
The promise of “Easy Money” captures the interest of many beginning
traders. You can find offers all over the Internet claiming, “risk free
trading”, “low investment”, and “high returns”. While there is some truth
in these statement you will find that they are over simplified and the
reality of FOREX trading is a little more complicated.
 It is
very tempting to dive right in and start trading as soon as you open your
FOREX account. Doing this will most likely lead you to make the two most
common mistakes of beginning investors. These are trading based on
emotions and trading without a philosophy or strategy. While watching the
movements of a currency pair you may feel that you are letting an
opportunity pass by if you don’t get involved. So you buy only to see the
price start moving against you, in a panic you sell at a loss, to then
watch the price recover. You must have a rational strategy and not base
any decisions on emotion. Undisciplined trading like the scenario
described above will only lead to losing money.
You have to be well educated in market movements to make rational trading
decisions. You must be able to read technical studies and analyses and use
that information to plot out entry and exit points. You must be able to
use the various types of trade orders available to maximize your profits
and minimize your losses.The first thing you have to do is to
understand the market and the forces that move it and affect it. Learn who
trades on the FOREX market and why do they do it. Who are the successful
traders and what do they do that makes them successful. By doing this you
will be able to identify the successful trading strategies and use them to
help you develop a strategy of your own.
Banks, Corporations, Governments, investment funds, and traders are the
major groups of investors in the foreign exchange market. While they all
have their own objectives four of these five all have one thing in common.
They have external controls; these are rules and guidelines that control
the trades that they make and the basis that they can be held accountable
to. The exception to that is the individual traders, they are accountable
only to themselves.
A trader that enters the market with out rules and guidelines is setting
himself or herself up to lose money. The “big boys” and the well educated
investors all approach trading with strategies, if you want to play on the
same field with them and be successful you will have to play by the same
rules. You absolutely must have a trading strategy, and you will need to
be disciplined and follow it.
Money management is a critical part of every trading strategy. Along with
knowing which currencies to trade and how to recognize entry and exit
points as successful trader must has to manage his available resources and
make money management part of his trading plan. Available capital, margin
and profits and losses must all be considered as part of strategy
development.
If your investment falls by 50% you’ll need a 100% rise to get you back
where you started. So when speculating in the markets, protecting the
money you do have is just as important as making some more. This book is
for you if you’d like to have a go at beating the system but don’t want to
lose your shirt in the process; if you’d like to benefit from the good
times and avoid the bad. Topics covered include: index investing, market
timing and trend following, stop loss orders, position sizing, straddles
and strangles. “I found it very easy to understand, not too much jargon…”
“I rather enjoyed the experience notes at the end of each chapter…”
“..it’s nice to be able to learn a few things from others’ experiences,
good or bad.” |
