Some Advices before Entering Forex Trading
Here u r some advices :
Trade with a Disciplined Plan
The problem with many traders is that they take shopping more seriously than trading. The average shopper would not spend $500 without serious research and examination of the product he/she is about to purchase, yet the average trader would make a trade that could easily cost him/her $500 based on little more than a feeling or hunch. The plan must include stop and limit levels for the trade, as your analysis should encompass the expected downside as well as the expected upside. Be sure that you have a plan in place before you start to trade.
types of Orders
Types of Orders
For trader looking to open a new position:
This trade will can use either a Market Order or a Pending Order.
A Market Order:
This order gives a trader the ability to obtain the asset at whatever price it is currently trading at in the market.
A Pending Order:
This order allows the trader to specify a certain entry price. A trader can enter a sell or a buy trade as using limit orders as follows:
Sell Limit: An order to sell a specified quantity of a currency at a specified that is above the current market bid price.
Sell Stop: An order to sell a specified quantity of a currency at a specified that is below the current market bid price.
Buy Stop: An order to buy a specified quantity of a currency at a specified that is above the current market ask price.
Buy Limit: An order to buy a specified quantity of a currency at a specified that is below the current market ask price.
For traders that already hold an open position:
This trader has also two types of order which are a Take profit order or a Stop loss order.
This order allows the trader to lock in profit. Say, for example, that a trader is confident that the GBP/USD rate will reach 1.7800, but is not as sure that the rate could climb any higher. A trader could use a take-profit order, which would automatically close his or her position when the rate reaches 1.7800, locking in their profits.
This order allows traders to determine how much the rate can decline before the position is closed and further losses are accumulated. Therefore, if the GBP/USD rate begins to drop, an investor can place a stop-loss that will close the position (for example at 1.7787), in order to prevent any further losses.
Hi Nice Article
Thanks for sharing.
It will help new forex traders to understand the forex market
Forex glossary is really nice.
hey all, there are alot of advices before Entering Forex Trading & I think it `ll be good to help each other in it & discuss together the advices & here u`re some of my advice in FX & hope that will live up to your expectations all
Cut Your Losses Early and Let Your Profits Run
This simple concept is one of the most difficult to implement and is the cause of most traders demise. Most traders violate their predetermined plan and take their profits before reaching their profit target because they feel uncomfortable sitting on a profitable position. These same people will easily sit on losing positions, allowing the market to move against them for hundreds of points in hopes that the market will come back. In addition, traders who have had their stops hit a few times only to see the market go back in their favor once they are out, are quick to remove stops from their trading on the belief that this will always be the case. Stops are there to be hit, and to stop you from losing more then a predetermined amount. You simply allow your profits on the winners to run and make sure that your losses are minimal. What is it about cutting a loss that is so hard?
Do Not Over Trade
Do not bet on the farm. One of the most common mistakes that traders make is leveraging their account too high by trading much larger sizes than their account should prudently trade. Leverage is a double-edged sword. Just because one lot of currency only requires $1000 as a minimum margin deposit, it does not mean that a trader with $5000 in his account should be able to trade 5 lots. One lot is $100,000 and should be treated as a $100,000 investment and not the $1000 put up as margin. Most traders analyze the charts correctly and place sensible trades, yet they tend to over leverage themselves. As a consequence of this, they are often forced to exit a position at the wrong time. A good rule of thumb is to never use more than 10% of your account at any given time.