Falling as a forex trader might have been a terrible lesson for you and there’s no way you could have avoided it. You wouldn’t be the first person to have jumped into forex trading as a result of the promise of wealth and endless riches. There are lots of people who jumped into forex with the same mindset, and expectations. You could have been aspiring to be a full-time and sufficient forex trader. It’s possible you were taught the perfect trading strategy too.
And you spend time testing and figuring out how you’ll be the next rich individual within your age bracket with the outcomes. Maybe, you had planned to be fully invested in forex trading and probably retire and live off your earnings. Somehow, your plans must have failed, and you outrightly ran into losses. This is the ideal trading experience for most traders and you could be one of them. For this reason, this article will be focused on the things that Forex trading roughly entails.
Number one lesson
Far be it from it, Forex trading isn’t a get-rich-quick-venture, you won’t be getting instantly wealthy with your account. You won’t be using a $10,000 account to turn into $1 million, it’s a pipe dream. The idea that you need money to make money is relatable to Forex and it’s a good lesson. Ideally, the amount of money you’ll earn will be proportional to the amount you’re risking. Ultimately, your success as a forex trader might not be a result of the good strategies you’re using.
Isn’t forex trading a worthy venture?
Don’t get scared, this doesn’t mean Forex trading isn’t a worthwhile venture, it is, and lots of people are amassing your dream wealth. The difference is that they have built their portfolio/accounts over time, to create a sustainable income. This is the lesson here, you wouldn’t be targeting 50%-100% profit annually, and you are not losing almost the same percentage.
This means even though you are trading at an edge, you will have a positive turnout, but, it will be small without leverage. Leverage is the ingredients that are thrown into the mix to help traders reach their expected gains.
Lesson number 2
You can make a return on a single trade that is multiples of the margin you used to open the trade if you use leverage well.
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As much as leverage is a good ingredient to scale into profit, it could also be your undoing. This means there is every possibility to turn a winning strategy into a loser with leverage. Traders catch themselves go-all-in in one or two trades and end up losing their accounts, even when they had an edge.
Thus, it’s a double-edged sword because it tends to turn big profits into big losses. Over the long run, if you depend on leverage alone you risk blowing up your account in no time. Of course, it takes one adverse market turn to drive the market to trigger a substantial loss for you.
This lesson is basically to be rational with your leveraging positioning to avoid losing your account. Being rational and sentimental in your tradings brings us to the next lesson.
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Lesson number 3
If you work with sentiments as a guide, it’s possible to turn the odds in your favor. What you have to learn here is how to use the IG client sentiment tool (IGCS) to make trading decisions. The tool allows you to compare the number of long traders to short ones for each currency pair. Once you have figured it out the lesson is to do the opposite of what everyone is doing. Using the IG client sentiment tool (IGCS) can turn your trading career around if it’s used as a direction filter.
Now, there, you have the list of things you should learn before you embark on your trading journey. Each lesson is basically to help you avoid pitfalls experienced by your predecessors.
read also: Foreign Exchange Market for beginners.
With all of this in mind, if you are new to everything, you need a lot to get started. You have to read and learn the basics, through guides, and updated news. Also, you have to follow market analysts, especially on social media. Learn each lesson well, and you’ll be on your way to amassing your dream wealth with Forex.