Firstly you need to know is that there are three types of trading available on this platform, all of which have their own set of advantages and disadvantages. These types include:
Spot trading enables you to buy the base currency at the current rate and sell it when its value increases against your second currency, thus making a profit out of this transaction
Currency futures trading
Currency futures trading enables you to buy or sell a currency against another at a specific price on a future date.
Spot options trading
In this type of trading, you speculate the exchange rate between two currencies, predict if it will increase or decrease within a specific time frame before expiration, and place your bet with the options broker. This type of trading is riskier than others but provides huge returns when successful. At times, traders even earn ten times their initial investment!
Now that we have discussed the different types of trade available on this platform, let’s discuss ten essential tips that can be used for increasing profitability while trading:
decide on a reasonable profit target before you start trading. You should also set a stop loss level for limiting your losses in case the trade goes against you
Never add to a loser
If it is not working, do not keep throwing good money after bad. When a trade goes wrong, never add to it by placing more funds into it, hoping that it will turn around. This strategy will only maximize your loss
Use stop losses
Always have a stop loss in place while executing every trade. It is advisable to have multiple stop losses so that the other starts taking effect if one breaks. It eliminates the risk of letting any single losing transaction wipe out your entire portfolio
4) Keep a Cool Head –
When executing a trade, please stick to your stop loss and take profits when available. Do not be the one who overtrades and ends up making a lot of trades to compensate for earlier losses. Also, keep yourself occupied during trading hours so that you don’t get tempted into doing something stupid!
Use stop limits
The use of stop limits helps To have complete control over any situation arising from an adverse market condition; it is advisable to use stop limits while executing a trade. It enables you to limit your losses if the market moves against you rapidly before executing your stop loss. Once again, multiple stop limits provide additional protection
Trade with market sentiment
If there is any news about a country’s economy, wait for it to be announced before executing any trades. After this has been done, you can trade with 100% accuracy by keeping track of the changes in economic indicators which influence currency rates
Keep an eye on economic indicators
Economic indicators are released by government agencies that provide information about the state of the economy, usually through numbers and data related to it. These indicators affect currency rates significantly thus should be monitored at all times
Never ignore technical analysis
Technical analysis uses the graphical representation to predict market price movements. This analysis is based upon what happened in the past to make assumptions about the future performance of individual currencies. It can also help you catch long term trends.
You must learn about all the different aspects of trading before jumping into the market and placing your hard-earned money at risk. Join a reliable forex forum and keep track of market updates daily. Also, do not forget to follow the latest developments in the global economy as they can significantly affect currency rates!
Patience is key
Successful traders make their money by keeping themselves composed during the ups and downs of this volatile marketplace. When executing a trade, wait it out until price levels reach your entry point before taking any action. This way, you will derive maximum profits from every trade!