Forex trading valuable peculiarities.
It goes without saying that your trading system is your advantage. To win in the stock market game, you must have some advantage over other traders. In this case I mean that advantage which is typical to your peculiar trading system. It goes without saying that your system has already undergone several complicated tests successfully. Here below there are some general guidelines for creating such a system.
Every time you open a position you must set your stop and limit orders. When placing stops and take – profits, keep in mind that the ratio of profit and loss should not fall below 2 / 1.
The matter is that your stop – loss order should be closer than 40-50 pips from the entry point. Certainly it’s an error to place orders 10-15 pips from the entry points. You should also take into consideration 5 pips of your spread. If we take into account the so called market noise of 10-15 pips, we obtain such a result that placing stops at a distance of less than 40-50 pips from the entry point gives us virtually no chance to gain from our position.
By the way I don’t advise you to place your take – profit orders closer than 80-100 pips from the entry point. In such a way it will be possible for you to reduce the influence of a particular broker on your trading. I mean that some brokers tend to display quotes very close to your open position. In such a way you can win with any broker.
If the value of stop order is about 40-50 pips and your take-profit reach about 100 pips then it’s possible to hold your positions open for less than two days. If the price does not go in your direction, then it will probably go against you. In this case wait for triggering your stop orders. Keep an open mind, risking no more than 10% of the deposit. It’s very essential for every trader I should say. Do not make deals that could lead to losses greater than 5% of the deposit.
It’s advisable for you to remove stop-orders and take-profits only if there’s a possibility to decrease losses and increase profits at the same time. Don’t forget that almost all the time you are exposed to such a prospect that a sudden fluctuation of the price can be rather devastating for you. So adjusting your trading orders is really a great art. You trading system should not be too difficult. I hope you don’t consider yourself to be a genius. It should be easy to adapt your trading system to the constantly changing market conditions. I’m sure you’ll succeed with this old chap. The main thing is that you shouldn’t ignore practice in this case. Your patience will be also helpful.
As in any other niche of life Forex needs some knowledge.
Of course, you can start forex trading and get quite successful in it. But sooner or later the losses will come. This is when one might think “Why didn’t I start with a nice forex book?”
This does not imply that after reading even the greatest forex book you will start closing trading positions with huge income, but this knowledge will save you from many dangers.