A Must-Know Before You Start Trading

A Must-Know Before You Start Trading
A Must-Know Before You Start Trading

To become more realistic

Many traders benefit from this market with their hope based on misleading foundations, the hope of making endless money. Bid in fact, the success of trading in the long term was the lack of a limited number of traders. Most lose retailers their money; up to 95%, and this is not a clerical error. So, if you thought you would be better than the 95%, it seems that you have already joined them, where your ego controls your decision and ego In the long run, it cannot make you profits in the forex market.

Before you set up a forex trading account, make sure you fully understand what we are going to mention:

To make a profit, you will suffer a loss

The most successful traders have gone through many losing streaks. Loss precedes an understanding of what needs to be done to be a trader. Within 5%. Long-term success is an ongoing process characterized by: humility, discipline, and refinement.

Forex trading is not suitable for everyone

If you do not have risk capital, then you cannot afford to lose. We advise you not to engage in forex trading. If you do not have a passion for the markets, we also advise you to stay away from trading here. Nothing is worse than wasting your time on a business You love, and you won't be able to improve on that thing anyway. Find what you love, and practice it.

No shortcuts

You cannot make huge profits without taking decisions with huge risks. And you should know that if you made a trade It involves high risk, and the desire for big profits, then you will suffer from both: your performance will be inconsistent, you will spend your days sleeping, and you will suffer great losses. Don't go ahead and ignore those who tell you that times have changed. This did not happen.

Mind game

You can stare at months-long charts, and you can read any book on trading and its practices for as long as you like. But you will not be able to set yourself up for successful long-term trading unless you: Understand, respect, and feel The importance of the mental aspect in trading (which is divided into feelings of fear and greed). The trading mentality is the most important tool. And you can't underestimate it. This is what separates the successful trader from the unsuccessful one. Don't underestimate me Those factors.

The Best Trading Strategies for 2023

Money management

Money is the foundation of any trading strategy. In addition to knowing the currencies that must be traded in, and identifying the entry or exit signals from the market, A successful trader must manage his financial resources. He must incorporate the principles of money management into his trading plan. prepare it. Before entering the market, you must specify the size of the position, the required margin, and profits and losses. nearby, and contingency plans.

risk in every trade

By entering the position, the risk ratio must be confined to a range of 1% to 3% of your capital in each trade. This prevents you from becoming greedy and helps you focus on the trading process, not the amount of money you have. you make it. So if your account balance is $10,000, the risk should be $100 to $300 per trade.

Reward-to-risk ratio

If your risk range is between 1% and 3%, then you need to look for deals with a potential profit twice that. Average at least. In fact, most traders are looking for deals that have a potential profit of 3 times the rate of risk Further, if you are risking $100 per trade, you better see a potential profit of at least $200. Note: Did you know that if you lose 50% of your money, you will need to make 100% (i.e. double what you have) to get out of the trade with at least a profit or a loss? So, put the risk under management.

Determine the position size

Many traders resort to techniques of this kind to enter or exit positions. allow them this way Focusing on the general movements of the market, rather than specifying a specific price level to enter at. There are many ways You can do that with it, but below we show you one such method, and how it will affect your trading plan with you.

The Best Trading Strategies for 2023

Determine the size of the hierarchical center

Let's say you see a potential trade, and you think it will bounce off a Fibonacci retracement line. And remember that you can Risk 3% of your capital in any deal, and let's assume that you entered the market at level 382, to ensure that you catch up The market moves if it happens. In the beginning, you have to risk only 1% of your capital, then you enter the market and watch what happens. 

If it will move in your favor (bouncing off the Fibonacci retracement line) or not. If it does not rebound and continues below the line (and moved through level 382, heading towards level 500), you can analyze the trade here. to ensure it is still comfortable for you. If it is, then you can place a new order, this time risking 2%, Thus, the risk ratio for the deal as a whole is 3%. This is what is known as hierarchical position sizing. The top of your position is lower weight from its base.

However, position sizing does not give you the ability to exceed any of your risk parameters. But you incorporate this With your risk metrics, you need to be aware of this because traders who use this method quickly often ignore the rules of money management. Note: You can use a limited position size to exit a position as well. Ideally, when you reach the first profit, you place a trailing stop loss order and continue in the market to see if the market moves in Your advantage is to achieve more profit.

The Best Trading Strategies for 2023

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