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Forex Trading Tips

  • 01

    Regularly Review the Forex Market

    Reading up on the factors that are most likely to affect a currency’s value can potentially be an important step for forex traders; regularly reviewing Forex charts and Forex news for updates on economic and political events may be useful when it comes to improving one’s chances of making a profit.

  • 02

    Closely Monitor Open Positions: Use Trading Apps

    Forex markets can be highly volatile, so it’s worthwhile keeping a close eye on all your open positions. To keep track of your trades when you are on the go, take advantage of the trading apps that ETX Capital offers, which are available on iPhone, iPad and Android devices.

  • 03

    Optimise Your Strategy

    There is much uncertainty associated with the currency market; although payouts can be great, losses can be large too. To optimise your chances, it’s a good idea to have a set plan in place before you start trading.

    Before entering a trade, consider the long-term goals that you intend to achieve and conduct research into the Forex market accordingly, to choose currency pairs that are optimal for your trading objectives and style. Consider the duration that you would like your trade to be open for and create a strategy to suit this. For example, whether the market moves up or down, at which rate of exchange will you choose to close your trade? It is important to make these decisions before you start trading, so that you can place stop losses and limit orders accordingly.

  • 04

    Risk Management: Take Advantage of Stop Losses

    A stop loss is an order that you can place to either buy or sell when your stock reaches a certain price. Stop-losses are a highly recommended tool; they can limit losses in the event of sudden market movements that move against your position.

    ETX Capital offer stop loss tools as well as premium guaranteed stops for long-term positions. Premium guaranteed stops are active outside of trading hours, so can go into effect for you if the market surges during these times. Traders should bear in mind that regular stop losses are not necessarily guaranteed; only premium guaranteed stops provide that sort of security.

  • 05

    Beware of Emotional Pitfalls

    Once you have invested in a trade, it can be more difficult to view the market objectively. For example, if a particular currency suddenly moves in a direction contrary to a trader’s speculation, he/she will often disregard significant factors that could be indicative of losses continuing to mount up. Many inexperienced traders may hope that the currency will change direction and the trade will eventually become profitable – and it might, but there’s no guarantee - it’s equally possible that the losses will continue to grow. Because of this, setting stop losses before entering a trade is particularly useful; It is often better to cut your losses earlier rather than to experience larger losses at a later stage because you didn’t exit the trade sooner. However, traders should take into account that regular stop losses are not guaranteed, meaning that in extremely volatile conditions such stop losses could be cancelled. Separate premium guaranteed stops are available, however; there is a charge involved, but this sort of stop loss will not be cancelled in volatile market conditions.

  • 06

    Trading in Response to Bad News

    Take care to avoid rash decisions based on emotional reactions. Trading immediately after receiving bad news about a trade can result in traders taking larger risks recklessly in attempt to regain lost funds.

    If you discover that your trade has taken a turn for the worse, a short break from the trading platform may be beneficial, so that you can later return to your trade with a clearer mind.

  • 07

    Hold onto Winning Positions

    Many traders impulsively close their winning positions before they reach their profit targets. This happens because traders fear that the market will turn against them and are nervous of losing profits already gained. Although it is important to take all factors into consideration, closing winning positions in a hurry can sometimes be disadvantageous when it comes to increasing your returns; in some cases, it may be more profitable to hold on to a winning position for longer.

  • 08

    Stay Focused on your Capital and Profit Targets

    Tracking your funds on a regular basis and keeping your profit targets in mind may prove to be helpful when it comes to making better trading decisions. For more information about Forex Trading, have a look at some of other articles on the subject.

    If you would like to access more educational material, as well as seminars and webinars focussing on Forex trading, you can sign up for an account with ETX Capital today, or practice with a demo account.

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