Once you’ve seriously decided to trade Forex, what Forex tips should you place importance on? Are there ideal times to trade? Is it possible to have a day job and earn extra income while you sleep?
Anyone looking for Forex tips should first understand their subject! At the heart of Forex trading are currency pairs. Currency trading pairs are two currencies whose price will move up and down depending on which currency is in favour or not! Understanding the nature of the major, minor and exotic currency pairs, will lessen the chance of you making a trading mistake. Equally the awareness of how economic events will shape sentiment towards a particular currency, will assist you in finding profitable Forex trading opportunities.
Other Forex tips to follow are those of end of day traders. End of day trading can mean several things, trading at market open, sending trades when the market is closed, or trading just before the market closes. Of course, the Forex market only closes for part of the weekend, but trading hours Forex means there are better times to trade than others.
For example, we recommend trading after 10pm UK time as markets have settled down. You can place your trade without having to second-guess whether it is the right time to do so. Placing trades at this time means you can keep your day job. For those too busy during the week, you can place your orders at the weekend for the week ahead. A good trader has discipline. Discipline to follow their trading plan, discipline to let trades play out. As part of this process it is useful to set and forget your trades. Forgetting about them is often the best way of allowing them to turn profitable, too much interference can be counter-productive. Learning to walk away and switch off is hard. Forgetting about them does not mean forgetting to manage your risk.
The best risk management tool that any Forex tips can highlight is stop losses. They are pre-determined trade limits, where once a price has been achieved (either having dropped or risen) will close as per your set instruction crystallising a loss or gain. As you have set them at particular levels, you are able to quantify your risk and prospective profit. Used correctly you will have a positive risk-reward ratio. Stop losses are also your best friend against a Black Swan event. Such an event could potentially wipe out your capital if you do not have stop losses in place.
Making money means looking after it first. Taking advantage of any products which have tax benefits is a good start. Some Forex tools, such as CFDs and spread betting are not liable to either UK stamp duty or income tax. CFDs are sadly liable to UK capital gains tax, although for UK taxpayers there is a handy tax-free capital gain allowance of £11,700 for the 2018-19 tax year. For higher rate tax payers, capital gains tax is cheaper than income tax, making CFDs still advantageous. Spread bets also have the benefit of being exempt from capital gains tax.
Forex trading involves losing money. This is something you may not want to hear but hopefully you will not ignore. Not every trade you will place will be successful. Knowing how to react with this disappointment and moving on is important. If you don’t, you could end up missing out on a trading opportunity. This could be one which corresponds perfectly to the rules laid out in your Forex trading plan.
Although Forex tips will prepare you to close a loss making trade, nothing prepares you for losing on a trade which have been leveraged. The temptation to earn large rewards through leveraging your trades is a risk not worth pursuing. When you start Forex trading you should focus on establishing a consistent profitable trading record. If you leverage up from day one without having processed currency trading tips you will risk losing your capital. This could be before you discovered your potential to be a successful Forex currency trader.
Researching which broker to use should be one of your first steps to test out those Forex tips. Ensuring there are tight spreads on offer will ensure the trade commission is not too expensive. It’s great being a profitable Forex trader, but if you are shelling out $$$ in commissions, you won’t see your account grow quickly! Other areas to focus on with FX trading accounts is a good customer service record (see their online reviews), who they are regulated by and if they offer a demo account. A demo account will allow you to make the cheapest ever trading mistake you will ever make! It also gives you a chance to discover your own Forex trading plan.
Forex tips involves focusing on certain key habits. Among them are understanding your subject, finding the right time to trade for you and prioritising risk management. Other Forex tips may appear boring such as being tax efficient. Yet even researching a good broker is worth it, imagine finding that dream trade and your trading platform crashing? Forex trading is exciting, but the devil is in the detail. Always be prepared for that!