TIPS FOR SUCCESSFUL FOREIGN EXCHANGE INVESTMENT

Foreign exchange currency trading is very interesting. If you are patient and calculative based on the tools in your hand, you will make money in trading foreign exchange currencies.

Having said the above, it is important to let you know that there are some tips which you will need to make you’re investing in foreign exchange worthwhile and successful. Those are the things this article wants to talk about.

NEVER LET A WINNER TO TURN TO A LOSER:

It is advisable to every potential investor in foreign exchange currency transaction to never allow your winning streak become that of a loser. How do you get this done? It is very simple and straight forward. As soon as you notice that, your trade profits are turning, do not proceed further, take your profit before they become negative. Cut your losses before your capital is eaten up.

LOGIC WINS, IMPULSE KILLS

It is logic that wins you a trade, but impulse action does not. What impulse does is to kill. Towards this end and as a result of this, each time you make a profit examine the reason behind your winning. You must examine the reason why you are making a trade. It is quite good that the trend is your device, but you must understand the market dynamics that are thriving. Going into foreign exchange currency trading simply because you have a financial obligation to be met, will not be a good strategy for the reason you trade

SET RISK LIMIT

It is important that you set your risk limit per each trade you embark upon. Doing this will assist you to have sufficient liquidity base. Your liquidity is your stock in trade. Trading in foreign exchange transaction is not the same thing as when you are buying stocks on the floor of the stock exchange. The golden rule for foreign exchange currency trading is that; do not invest more than 2% of every $1000 of your investible capital outlay. This is equivalent to 2% of your Capital. If this advice is followed, you can be assured that you will be able to stay in the business, even though you may want to look at this suggestion as a conservative one.

TRIGGER FUNDAMENTALLY, ENTER AND EXIT TECHNICALLY: The propelling reason why you enter the trade should the reason that is fundamental. In other words, what should induce you to foreign exchange currency market should be market strengths and weaknesses. Nevertheless, taking actions based on technicalities, such as support and resistance should be factors to be a successful foreign exchange currency trader.

ALWAYS PAIR STRONG WITH WEAK CURRENCY: Let it be your fundamental policy that you do not just pair any currency against the other for the fun of it. You should at all times of trade attempt, pair a strong currency against a weak one. Currencies are just like a human being; do not double on like currencies, that is, currencies that have similar attributes. The correlation between EUR/USD is positive/negative. The trend line about EUR/USD seeming speaks to reveal that, acts almost identical to GBP/USD. Where there a situation that there is a strong Bullish EUR/USD trend, whereas the USD/CHF will almost be less than 95% Bearish. To this end, a clear understanding of currency co-relationship is inevitable for any trader that wants to be successful.

BEING RIGHT, BUT BEING EARLY MEANS YOU ARE WRONG:You are advised not to place your trade until the trend and analysis come into reality.

THE DIFFERENCE BETWEEN SCALING IN AND ADDING TO DIFFERENCE:It is important for you to know the difference between scaling and adding to the difference. Do not enter into a trade, only for you to come out as quickly as you have entered into it. It is not as it is played in the stock market if you are thinking that it is similar and want to apply the same principle, I tell you, it is a KISS of DEATH. Scaling is appropriate only when the trend is reflecting a very mild setback, yet sentiment remains actively strong.

For example, where a trade moves upward to about 80pips and all of sudden, it moves back by about 20 pips, What is Forex? means is that the trade has temporarily lost steam or the volatility has become lower than expected.

MATHEMATICALLY OPTIMAL MAY BE PSYCHOLOGICALLY IMPOSSIBLE: Usually, when a new trader enters a market, they become excited because of the statistical data that they are in possession of. They are so sure of the data, that the thinking will be that to make millions of Dollars will be an easy ride. No, it is not as you think. Foreign exchange currency trading can be very lucrative, yet again it can turn the other way around, and you become broke, and possibly even be in debt.

YOU CAN PREDETERMINE YOUR RISK, BUT YOUR REWARD IS NOT:

Essentially in the business of foreign exchange currency transaction, you may be able to pre-determine you’re your risk by setting it at a minimal level beyond which you will not be prepared to invest or trade. While on the other hand, you cannot determine your reward. The reward you earn in this trade is a function of the fundamentals that rules the market at any given time. It is advisable, however, that if the trade is moving in your favor, let it continue until it gets to its momentum.

DON’T GIVE EXCUSE EVER:

In foreign exchange currency transaction, if you took the effort or pain to do a research and the rule of the trade, then do not give up too soon. Wait for a trade to execute successfully.