Finding a Forex Trading System That Is 100 Percent Accurate.
The foreign exchange market also referred to as the forex trading system does not always guarantee a profit. This is true for the majority of investments. That isn’t to say you should avoid the area entirely.
You’ll know the best ways to reduce the risk of loss and increase your chances of success by following a few best practices. Here are a few to get you started.
It Is Simple.
The single most important thing you can do to improve your odds is to take it slowly rather than rushing into the forex market.
The forex market is a highly leveraged market, with leverage ratios ranging between 50:1 and 100:1. In some cases, leverage of 200:1 is possible. This means that with just a $25 investment, you can make a profit of nearly $500 in theory. It also means that if you use the maximum amount of leverage available, you can be completely wiped out in a matter of seconds if the market moves against you.
Another feature of the forex market that distinguishes it from stock trading is that anyone who can present a debit card and some form of identification is qualified to trade—and on margin ratios unavailable in the stock market—without depositing a single cent in their forex account.
These characteristics of forex trading may entice dreamers seeking a quick fix for their financial woes. In this way, it’s similar to state lotteries in terms of appeal. In reality, the chances of winning a multi-state lottery jackpot are slim to none.
In the case of forex, the risks are particularly high for new traders because, unlike the lottery, trading on the forex is a game of skill, which many new traders neglect to master before placing their first trades.
When you’re first starting out in trading, the best advice is to take it easy. Set loss limits ahead of time and stick to them. Following a large losing trade with another in the hopes of recouping your losses is a strategy that almost always backfires. That isn’t trading; it’s irrational gambling.
“Be Prepared,” a song by American songwriter and humorist Tom Lehrer, advises: “Be prepared as you march through life…” Lehrer was joking, but the point should be taken seriously by traders. In fact, the phrase can serve as your personal motto. Your results will most likely be average unless you are well prepared before (not after) you begin trading. In the forex market, the average is:
Approximately two-thirds of forex traders lose money, with many losing money they never had before and ending up in massive high-interest credit card debt. 1
There are two excellent ways to prepare for a successful forex trading career. One option is to simply read up on forex trading. There’s a lot of it, and it’s all available on Amazon and other online retailers. Customer reviews on Amazon will give you a good idea of which books are useful and which are not.
Opening a practice trading account is another excellent way to prepare. Almost all major forex brokerages in the United States provide them for free. Take your practice trading seriously and keep track of your results. The practice software will keep track of everything for you, but it won’t help you unless you examine it and try to figure out why some trades worked and others didn’t.
Be a self-disciplined person.
There are a few key components to being disciplined. Before you start trading, you must first decide how much risk you are willing to take. If you’ve made a decision, don’t change it because of a bad trade. That occurs. Second, when you start actual trading, you should use your successful practice trading methods (and only those methods!). Always stick to your strategy. Without it, you’re just another inexperienced trader who’s been forced out of the forex market after a few costly and mostly miserable weeks.
Scams should be avoided.
This is a simple best practice. Be wary of anyone who offers to sell you a method or system that promises to “guarantee” results or generate a certain percentage of profit over a set period of time. Only trade with well-known and well-established traders in the United States. It’s simple to check out a potential broker by going online to the National Futures Association, which is similar to FINRA for stock brokerages in the United States. Use BASIC, their broker-checking service, once you’ve arrived. Drop it like a hot rock if your potential broker isn’t listed or has a history of complaints.
Stay always updated with us on Facebook, subscribe!