The foreign exchange market —also known as Forex (Foreign Exchange) or FX— is a global, decentralized market in which all the world’s currencies are traded.
In this currency market, the value of daily trades is estimated at $5 trillion, more than the sum of all markets combined.
Forex has become fashionable in recent years because of its particular characteristics: geographical dispersion, 24-hour trading from Monday to Friday, market liquidity, currency volume.
These and other characteristics, make Forex a trading opportunity that is not available in other investments, and the profits use to be extremely high.
However, achieving success in Forex trading is not an easy matter. Beginners, fundamentally, often make some mistakes that take them out of the market or cause them big losses.
- Overconfidence: Although in Forex it is necessary to act with confidence, some traders tend to be overconfident and are not attentive to market signals. Although it seems an easy matter, education in these matters is vital before starting to trade. Study first, as 100ForexBrokers suggested.
- Avoid risks: In this kind of business, as in almost all, “those who do not risk cannot win”, taking excessive risks can lead to the loss of profits. The most advisable advice is to evaluate the reward-risk ratio, which should always be greater than 1 (1= $50/$50).
- Be patient: Forex is a business for patient people. Anxiety can be a bad companion in currency trading. Stick to your plan and be disciplined. Experienced traders wait quietly, for days or even weeks, for the right opportunity to present itself.
- Respect your stop loss: Remember that Forex is a market with a lot of volatility. To protect yourself from these changes, there are stop losses, which are limits to avoid losing more than you can keep. If the market changes, stay calm and do not extend your stop loss. Do not let your emotions make the decisions.
- Do not hold on to losses: Sometimes, because of a “hunch”, some traders hold on to losing positions. They believe that, at any moment, it may change. You need to remember that Forex can last a long time and, seeing your profits fall, can even affect you psychologically. Move on.
These are some basic tips for those who are starting out in the fascinating world of Forex. But, although it is important, it is not enough to have the will to succeed. It is also necessary to be aware of market trends and to study constantly.