As with any kind of market trading, the first thing you should do is make sure you know your bottom line — where your stop signs are. Have a limit set firmly in place and as the saying goes, ‘know when to fold ‘em.’ When you’ve hit your goal profit or loss limit, walk away.
Forex trading, because of the high probability to earn a great amount of profit in a short amount of time, can be addicting to anyone, so put up safeguards to keep yourself from falling into a ‘can’t stop no matter what’ category.
Make sure you have money you’re capable of risking in case something goes wrong. Am I saying you’ll lose money if you engage in Forex trading? Not at all and the odds are actually more in favor of you making a profit as long as you know what you’re doing. Just make sure the money you’re using isn’t money you have to have to live on.
If you’re still a relative beginner, the first move you should make is to read Forex tutorials that show you the ropes from day one. When setting in place a Forex trading strategy, you want to pay attention to something called channels.
Remembering learning about charts and graphs in high school and thinking they would be useless information? Well they’re not. Here’s where they come in handy. On a graph, channels are lines that go up and down and can help you learn and gauge what’s been going on with the currency.
In other words, what’s the range? The graph looks like squiggly mountain peaks (which represent when the currency is up) and valleys (which represent when the currency is down). Like playing connect the dots, you draw lines from mountain peak to mountain peak. You can see at a glance how the currency fared.
If you’re brand new to Forex trading and you understand all of the buzzwords, but you’re not completely sure how it works, consider searching for a Forex site that will allow you to take a free demo in Forex trading. You can take your time, learn how it’s done without having to worry about any monetary risk to you.
You can also talk to others who understand the ins and outs of Forex trading. There are forums, web seminars and groups that will take you under their wing and teach you the ropes.