At first, most traders underestimate the difficulty of working in Forex, and then, on the contrary, they start to mystify exchange trading. As a result, everything comes down to observing certain rituals, which only complicate the trading process and negatively affect the result. In fact, every trader is the owner of the position himself and only he depends on the success of working on Forex.
For example, with such a simple tool as the twelvedata API you can achieve better results in trading. Professional players are aware of this, but a beginner who has just started his journey in this direction, such subtleties of trading are not known. However, there are several things that are really important in exchange trading. In this article we will try to list the most important factors that you should pay attention to when trading.
- Risk management is actually the most important aspect when trading in Forex, many people do not pay due attention to risk management in vain. You can make a steady profit for a year and lose your profit in just one day, just because you have broken the rules of money management. Trading requires constant internal control, the main thing is not only to earn profit, but also to protect it from losses. The exchange rate of a currency pair never moves strictly in a straight line in the direction of the main trend, there are always several correction points in the direction of the trend. It is true that sometimes there are exceptions to this rule, but they are not necessary to be guided by them. It is for this reason that a rather rarely opened trade becomes profitable at once and keeps a positive financial result during the whole period of its existence.
- The profit/loss ratio is the main rule of a successful investor: “Profit from a profitable trade should always be much higher than losses from a losing trade”. That is, a profitable trade should be held until the last moment, until it becomes clear that it is no longer possible to earn. At the same time, a loss-making trade should be closed almost immediately, as soon as there is a suspicion of the wrong direction of the selected order. Unfortunately, it is quite difficult to make a decision to close a position, confidence in such actions comes only with time.
- You should have your own opinion. You should learn to analyze and make the right conclusions, not follow the crowd. As when everybody starts to open a certain type of deals massively, it is too late to repeat such behavior, as the market can already make a reversal. As professional investors say, they got the most profit from deals made on the basis of their own conclusions. It is better to focus your opinion on significant indicators, such as Real time Nasdaq index, rather than follow the opinion of other traders.
- The ability to wait is also perhaps one of the most important qualities. Let’s talk to a trader who has opened one trade a week and traded practically, preventing unsuccessful deals. He was catching certain news and only after their appearance he entered the market, really ideal way of trading, giving not only profit, but also a lot of free time. At the same time, if you evaluate what is more important in trading – strategy, money management or psychology. It is possible to give an unambiguous answer that psychology takes the first place, as a person subject to feelings will break any strategy and will not be able to follow the rules of money management. That is why it is so important to start trading on the stock exchange first to put your emotions in order and refuse spontaneous decisions, and only after building a trading system.