Making
a forex trade is a simple process, but it's something that should be done with
caution. Forex trading is all about managing risk and emotions. If you are
making forex trades and you feel emotional, nervous, or any anxiety at all, you
need to take a look at what you're doing.
Most traders that have issues with nerves have either
lost money, they are trading with too much leverage, or both. If this is you,
take a look at the basics of forex
risk management and start doing things like
setting reasonable stops and reducing your leverage. It will help tremendously.
The Mechanics of the Process
To
make a forex trade, you'll need a forex broker. If you don't have one, see
this;
. Once you find a broker you'll need to open a Forex
Trading account. A simple process, but it can take a few days to get
everything squared away.
See also: Getting
Started with Forex Trading
Once you have a forex trading account that is funded, you
can prepare to start making forex trades. The first thing you'll need to decide
is what you want to trade. A particularly liquid and well traded currency pair
is the EUR/USD. It moves around 70 pips a day on average and is the currency pair of choice for
many professional traders. If you think you might like to start with something
that is typically slower, take a look at EUR/GBP. Slow might be boring, but it
won't kill your account if you make a misstep.
Once
you've decided on a currency pair to trade, open a chart and do your trading
analysis. Which direction do you want to trade? You can make a long or short
trade. You short a currency pair when you expect it to fall in value, and you
buy it, or go long on it.
After
you decide what you want to do, it's time to make your trade. Some brokers
allow you to right click right on the chart and make your trade, while others
have buttons that say buy or sell. Make your appropriate choice and prepare for
a new screen to come up. Different brokers have various screens, but they all
say generally the same type of thing. There is a field showing you the current
price of the currency pair, a field for lot size(trade amount), one for a
limit(close on profit), and one for a stop loss(close on loss). Some brokers
have other options, but for the purpose of this tutorial we will keep it
simple.
If you have a target in mind, set a limit
order for the price you think your trade could
potentially reach. Some traders prefer to trade and see what happens, and
that's OK, but you should get in the habit of setting target prices. It tends
to help you avoid making trades, just to make them. Equally important, you
should set a stop loss. (See: stop
loss basics) A stop loss is like an emergency
exit when your trade has proven that it's not going to work out. A stop loss
shouldn't be used to prevent just any little loss, it should be used to end
your trade when the trade has proven that it is definitely not going to work
out. Stop losses get you out of the market at a loss that you find to be an
acceptable one, it's not something you should overlook when entering your
trade.
With
your trade entered, now comes the best part, submit your order to the market,
and let the market do what it's going to do. You can certainly watch the action
for hours on end letting your emotions whisper in your ear on every move up or
down, but it's best to go do something else and let your programmed logic
handle your decisions. Something that is common with new traders is to sit and
adjust trades constantly, flip directions, etc. This is a counterproductive
method of trading and it will slowly drain your account, try to avoid it.
Once your trade ends, whether the result is good or bad,
log it in your forex
trading journal and start looking for your next
trade.
Keep
in mind that you can't win every trade, so rather than letting your losses get
you down, study them and figure out what went wrong. To be a successful trader
you simply need a unified approach to risk and to win more trades than you
lose, that's it.
Good
luck to you and remember, if you ever have any questions, you can email me at
Terry
Burch;
Thanks for your great information, the contents are quiet interesting.I will be waiting for your next post.
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