Forex trading has emerged as one of the most popular and lucrative fields for investors and traders. It comes with many benefits and as a result, a lot of people have started showing an interest in it. However, there are some precautions that must be taken and things that shouldn’t be done in the world of forex trading. In this post, we will find out what they are. Let’s get started.
Forex Trading: Here’s What You Should Never Do
Don’t forget who you are
It is very important to define yourself in Forex and to create strategies that are suitable for you. Whether you are patient or not, whether you expect short-term or long-term earnings, your psychology and motivation are of great importance for you to make investment decisions. By answering these questions for yourself, you can make the best investment decisions. For successful investments, you need to work carefully and meticulously and analyze your goals.
Don’t ignore risks
Forex, like all markets, has various risks. Since you trade according to price fluctuations, you are likely to encounter situations that you did not take into account. Forex is a big market and transactions happen very quickly. When you make a mistake, you may not have enough time to undo it. The fact that Forex-specific advantages such as leverage ratios may also be among the factors that increase the risk. With the ambition to win more, you can lose more money. If you act calmly and planned in the Forex market, you can deal with the risk. You can reduce the risk by applying the “stop loss” / “take profit” orders correctly.
Don’t succumb to your emotions
When you trade Forex aggressively with the greed to make money, you are more likely to run into risks and incur losses. For this reason, you should prepare yourself for Forex as experience, knowledge and psychology and you should do your transactions with a calm attitude.
Actions you take greedily, with panic and excitement will generally result in harm to you. When investing, you should control these emotions and be calm. You should make investment decisions by putting your emotions aside. By automating your trading strategies and steps, you can control your emotions.
Don’t trade with shady brokers
In the Forex market, which can be entered legally in most countries, there are still companies that make shady transactions. If you do business with these companies, you will not be able to find any kind of support in case of any problem and you have a high probability of being defrauded. For this reason, you should stay away from such unauthorized Forex institutions.
Don’t believe in urban legends
Many urban legends about Forex are floating around the internet. It is among these legends that Forex has no risk, makes it rich in an instant with high leverage ratios, and provides 100% profit. These types of myths are usually put forward by scammers. For this reason, it is necessary to stay away from such urban legends that give exaggerated information about Forex.
Don’t imagine getting rich instantly
Do not dream of getting rich by investing in Forex, if you make a profit of around 10-20% of the principal, you can see yourself as successful. Especially when you are just starting out, stay away from getting excited and making high amount transactions. Make small investments, gain experience. You can increase the investment amount after you start to get the return of your investments and gain experience.
Don’t be stubborn
Having a stubborn attitude while trading can cause your “stop loss” level to change, causing you to lose money or even your entire investment. After determining the gain and loss rates in Forex, it is recommended not to change them. When we make a profit, you should enjoy it by increasing your motivation. When you suffer a loss, you should review your mistakes, stay away from the market a little bit, and then re-enter.
Don’t start with multiple currency pairs
There are so many currencies and exchange rates in the world and it is almost impossible to master them all. It is best to trade with the currency you know and understand the movements of. If you cannot trade in the currency of your country, you can choose the most liquid and traded currencies.
Don’t keep losing positions open
There may be expert opinions and analyses that predict what will happen in the markets, but no one knows exactly how long the prices will be the same, when they will change. Therefore, when investing in Forex, always focus on active positions and close your losing trades.
Don’t invest in sectors you don’t know
When choosing investment tools, focus on the sectors you know. By trading in sectors you know and can predict, you will reach your goals in the most accurate way.
Don’t ignore history
Developments in the economy repeat themselves, just as they do in history. Therefore, knowing the past means knowing the future. For Forex investments, knowing the economic developments, fluctuations and crises experienced in the past years gives you a great advantage. For this reason, research the past, read and apply to the science of statistics. Thus, you can make the right moves by reducing the risk.
Don’t focus on single investment portfolios
Do not focus on a single instrument in the Forex market, divide the risk by entering multiple investment areas. So when you make a loss in one area, you do not lose all your money. While you lose on one, you can gain on the other.
Don’t be impatient
Forex beginners are advised not to trade against trends or to follow the upper and lower bounds of the market main trend. Following trends makes you feel safe. Opposition can put you under pressure and cause you to fail. For this reason, when entering the Forex market as a new investor, it is necessary to be patient, follow the main trends, and attempt more risky transactions as you gain experience.
Don’t give up
This tip applies to basically anything in life, and the Forex sector is no different. Invest an amount you can sacrifice when investing in Forex. If you develop yourself, be patient and take the right steps, Forex can provide you with a good return on your investment. Especially if you spend the learning process by keeping the risks to a minimum, you can become a Forex trader in the future, making a profit by improving your skills and making the right moves.