Forex is one of the most attractive and rewarding financial markets for traders and speculators who want to earn money by trading or we can say intraday trading. Trillions of dollar worth of currencies traded in the Forex market on a daily basis which gives it tremendous liquidity which is the first requirement of a trader. On the other hand, it is a global market which means a trader can participate in the market no matter where he or she lives or at what time they want to trade on the weekdays.
In this article, we are going to reveal the most helpful and useful tricks and tips which a Forex trader can use to make money from Forex trading.
Define a realistic goal.
This is the most basic tip which usually got neglected by new or even experienced trader. People usually start trading without having a realistic goal in their mind. Many time traders set a very unrealistic trading goal after getting an unusual profit out of the market.
The Forex market has the potential to give tremendous returns which the tools and advantages it provides to the traders but it is always recommended to set a realistic trading goal which is in sync with your capital.
Knowing Your Risk Apatite:
Knowing your risk apatite is the most important factor in trading. Before an investor starts trading in Forex market he should calculate his risk-taking capacity and understand his risk apatite as every trader is different and they have a different risk taking capacity.
After defining your goal an investor should calculate his risk taking capacity by taking in account various factors like age, income and saving ratio, average life expectancy and financial situation and obligations in different stages of life. This will help him in defining his risk-reward ratios and daily profit and loss target levels to achieve the predefined goals.
Set a Rewarding Risk and Reward ratio:
After calculating the risk apatite the next step is to set a suitable Risk and Reward ratio according to the trader’s risk apatite.
A well studied and suitable risk and reward ratio is a very important part of a profitable trading system. A trader should set a risk and reward ratio after considering all the important factors of trading like market movement, risk apatite, trading signal accuracy, and profit expectations. A good and well-researched risk and reward ratio is the backbone of any trading system.
Every trader should set the risk and reward ratio according to the risk-taking capacity and the accuracy of the traders trading decisions. for a new trader whose trading decision is not very accurate, he should keep his trading risk and reward ratio higher so that if in a losing trade accuracy will reach 50% also then too he will not lose his investment.
Selecting the Level of Leverage:
Forex is a highly rewarding market for day traders as it gives them a massive amount of leverage to trade in the Forex market. A trader can enter in big trades with a very small amount of investment with the help of high level of leverage Forex brokers provide to the traders. This huge amount of leverage is a very tough thing to manage as a misuse of it can lead to huge losses even traders can lose their whole investment capital in only one wrong decision.
Because of this managing, the level of leverage according to the risk-taking capacity is very important in Forex market not only to prevent huge losses but also to optimize the available leverage efficiently to make money out of the market.
As we all know Forex market is a global market and you can trade whenever you want to trade no matter whether your local market what is the time except weekends. Forex market stays active throughout the day on weekdays but there are few market open overlaps which create higher liquidity in the market and because of that these are the timings which are highly suitable of day traders to take entry in the market.
The best time to trade in the Forex market for a day trader is the Asian market times on which a trader can trade with JPY pairs and between the London market and US market. These are the time where majority or movement happens in the Forex market because of higher trade volume. Also, the overlap time of the European equity market and US equity market opening usually results in higher liquidity in the market so it is always advised to trade in these market timings.
Forex is a dynamic and a highly liquid market which give a trader all the required tools to make money out of the market and with the help of the tips given above anyone can become a successful Forex trader if one makes the trading system by keeping in mind all the above-mentioned tips which can make any trader a professional Forex trader.