FOREX TRADING
Volatility is what keeps your trading activity moving. However, if you're not careful it can also completely destroy it. When volatile, the market moves sideways, which makes spreads grow and your orders slip.
Incorporate volatility analysis into your trading strategy. As a beginner Forex trader, you need to accept that once you are in the market, anything can potentially happen, and it can completely negate your strategy.
For example, the crisis with the Swiss franc in January 2015, ended business for many traders and brokers within hours.
Admiral Markets have helped to minimise volatility risk for you by offering a package of advanced volatility trading settings to help you avoid the reefs of the financial markets.
Everything Is Old News in This Industry
Updates you hear on CNN, Bloomberg and in your Trader's Calendar have already been discounted by the market. The only thing that news promises, is volatility.
Spreads grow when news is out and before you know it, you are deep in re-quotes and slipping stop-losses. Unless you are a professional news trader, stay away from news trading.
The Trend Is Your Friend
Whether you are a beginner trader or a pro, you are best to trade with what you see and not what you think.
For example, you might think that the US dollar is overvalued and has been overvalued for too long. Naturally, you will want to short and you might be right eventually.
But if the price is moving up, it does not matter what you think. In fact, it doesn't matter what anybody thinks – the price is moving up and you should be trading with the trend.
There Are Hundreds of Available Markets
When learning about Forex trading, many beginners focus on major currency pairs because of their daily volatility and tight spreads.
But there's numerous other opportunities – from exotic FX pairs, stocks, commodities and energy futures to indices. There are even indices that track groups of indices and you can trade them as well.
How many markets you scan for opportunities is up to you, but do not limit yourself to one instrument or one market. Market limitation leads to overtrading, so diversify your investment.
The Trade Is Open Until It's Closed
A regular Forex trading beginner concentrates on opening a trade, but the exit point is equally important.
If your trading strategy does not consider the mechanism of closing a deal, it's not going to end well, and you're much more likely to suffer heavy losses.
Ensure You Are Legally Protected
Financial trading is usually a legally regulated activity. Government-assigned regulators of brokerage firms urge caution to Forex trading beginners across the globe.
When checking for secure conditions in investing or trading, three major points to look for are:
segregation of client funds – assures your money is not used by your broker for anything except your trading, which makes it always available for withdrawal upon your request;
financial services compensation scheme – defines the amounts of funds that will be compensated to you in the extreme case of your broker or its bank going bankrupt;
efficient customer enquiry and complaints procedure – ensures that if an enquiry is filed by a Forex trader and cannot be resolved within a few hours, it is immediately forwarded to the customer support desk or compliance department.
Whatever happens, make sure your investment is protected.
Test on a Demo Account or With Simulation Software
Every broker offers a demo account – beginner or not, test every new strategy there first. Keep going until the results are conclusive and you are confident in what you are testing.
Only then should you open a live account and use your strategy in the smallest volume trades available. Be sure to treat your demo account trades as if they were real trades.
You may also use Forex simulation software to simulate market conditions, creating an impression of a live trading session.
