Recently, foreign exchange transactions have become very popular in Australia and around the world, and people from all walks of life are trying their skills in the world’s largest financial market. At present, the estimated value of the average daily foreign exchange transaction volume is about 5.3 trillion! The entire Australian stock transaction is a drop in the ocean compared to this. Even if the stock trading volumes in London, Tokyo and New York are all added up, it is difficult to match the powerful foreign exchange market.
With so much money flowing every day, it is no wonder that so many people want to take action. But if you think you can trade the foreign exchange market and become a millionaire overnight, please think twice. Forex trading is a serious matter. Before you play, you need to know the secret of this game.
1-Determine and stick to the strategy.
It sounds simple, and he does, but it becomes challenging to stick to your game plan when your money fluctuates with the market. People always open positions, take a ride on the roller coaster with the ups and downs of the graph, and then change their positions and strategies. Such behavior is not only unstable and unprofessional, it also deprives you of the opportunity to make a profit, because it lacks the system and discipline necessary for successful trading.
Before you start trading, it is important to establish what you want from foreign exchange trading and develop a clearly defined trading strategy that fully supports your goals.
After the overall plan is established, you need discipline to actually execute the strategy and stick to it. Your ability to persist will be tested, but sticking to your trading plan is an indispensable part of your trading career.
If you need assistance in developing your trading strategy, this is a systematic training course for aspiring traders to build their own foreign exchange strategy.
2-Don’t let emotions dictate your trading.
The psychology of traders is one of the main elements that are often underestimated or considered secondary in foreign exchange trading. However, this element alone can make or destroy a trader.
The emotions experienced by the trader are a rich and complex journey, so it is indispensable for you to have a good understanding of how the psychology of a particular event reacts.
You can see from the picture below that when a transaction goes in the direction you want, he will take you to the realm of happiness and intense joy. On the other hand, if you find that you are losing money, feelings of regret and depression flow all over your heart.
Knowing your personality, temper, and your reaction to events will allow you to use your emotions to control the situation instead of letting the situation control you.
The main key to developing a trading strategy is to be compatible with your personality, rather than trying to change your personality to adapt to a specific trading strategy.
When you realize that you will have different emotions at different stages of the transaction, you will be able to notice when the emotions are about to begin, and don’t let emotions affect your judgment. Noticing your emotions can also act as a trigger to turn your head back and focus on the actual trading, and less focus on your emotions.
As you become more and more experienced as a foreign exchange trader and understand what emotions will be triggered at what point in the transaction, you can start to “leverage” your emotions to help you become a more skilled trader.
3-Develop a risk management plan.
In the world of leveraged trading, everything changes rapidly, and risk management is to control your risks and manage your transactions to ensure your success and survival as a trader.
Having the appropriate risk management lever linked to your trading strategy is one of the smart things you can and should do.
Use your stop loss and take profit orders effectively. Stop loss and take profit orders are very simple tools that make your trading career successful rather than breaking a big hole in your wallet. Please consider using these orders in each of your transactions.
In addition, don’t invest too much money in a single order. Generally speaking, a trader who exposes more than a quarter (25%) of his portfolio to risk in a transaction is tantamount to putting an end to their market transactions.
2% to 5% of the portfolio under a single transaction is the recommended risk exposure. Following this approach to risk management can maximize your long-lasting opportunities in foreign exchange transactions.
Can show you how to develop and properly execute your risk trading plan.
4-Choose a good broker.
There are many foreign exchange brokers in Australia to choose from, which makes it difficult for traders to choose the right one.
When choosing a foreign exchange broker, the following are several important considerations:
Regulation-this is one of the most important elements. Make sure your broker is regulated by the market where you live and trade. The highest form of regulation in Australia is the Australian Securities and Investment Commission (ASIC). ASIC-regulated brokers must comply with strict regulations and audit procedures, including compliance with the guidelines mentioned below, how to hold client funds (funds are independent), and provide traders with security guarantees.
Funding independence-Ensure that your broker separates client funds from company operating account funds and puts them in trust accounts independently.
Account negative value protection-In fact, not many brokers provide account negative value protection. Negative value protection means that your loss will not exceed your account balance.
When the Swiss National Bank cancelled the removal of the upper limit on the exchange rate of the euro in January last year, the Swiss franc plummeted by 30%. Many traders lost everything and actually owed their brokers money because their accounts became negative.
If your broker provides negative account protection, of course it will be a lot more reassuring, and this is definitely a question worth asking.
Dedicated account manager-In recent years, more and more foreign exchange brokers only provide automatic customer service and rarely interact with customers personally.
When traders are very busy and have their own full-time jobs or careers to take care of every day, having a dedicated account manager to assist you with any trading problems is definitely a great advantage.
Provide educational courses-knowledge is the key to trading. Obtaining a structured foreign exchange education course coupled with continuous teaching can make a big difference between the success and survival of your trading career. Check whether your broker has a good education program, and if so, make the most of it.
Real-time market data-trading is to enter the market at the right time with the right information, so obtaining the most reliable and real-time market information is equivalent to gold for traders. Find a broker that provides good-quality technical analysis and real-time signals, so that you can grasp the most timely market data at any time.
5-Choose the account type and leverage that suits your needs.
Just because there are several account types that can provide fancy features and 1:1000 leverage, it does not mean that you have to use one of them to trade. Think about what you want from foreign exchange trading and evaluate your level, then choose the type of account that suits your requirements and can carry out the work.
Generally speaking, a high-leverage account represents high risk. If you are a novice, a low-leverage standard account may be more suitable for you.
As a trader, you also have to choose an account with low transaction costs. Transaction costs are presented in the form of commissions and spreads, but keep in mind that when choosing an account, you should look at the overall value of the funds, not just the cost of the transaction.
Pay attention to what kind of services your account provides you. Some brokerage accounts will provide free real-time signals and trading settings directly to your trading platform.
Forex trading is about patience, learning, persistence and discipline. It is also related to charts, signals, leverage and choosing the right broker. As long as you have a clear trading strategy, correct thinking model and sound risk management plan, you have established the core foundation required for successful foreign exchange transactions.