Forex trading has been in existence in Singapore for quite some time now. Experts in the industry will tell you that succeeding in the forex market is an arduous task that requires total discipline and patience.
Additionally, the forex market in Singapore is becoming overly competitive. In order to make money, traders should devise a robust strategy and stick to the same. As a trader, you should be prepared for wins and losses, as well as understand the amount of capital you can lose comfortably in a day.
Further, you must restrict the amount of money you can comfortably risk on each trade that you execute. It is important to carefully analyze the currency pairs that you want to trade in, devise specific rules and follow them strictly.
Once you have a robust strategy and apply it always, you should be in a position to make a sufficient amount of money eventually. Here are some tips to help you become a successful forex trader.
Know how to set a stop-loss
Veteran traders understand that an effective trading strategy consists of two parts. These are: increasing winning trades, and leaving a losing trade early enough. Once a trade goes against your expectations, you could be tempted to hold it anticipating that it will change to your favor. However, this is a risky strategy that can be quite costly.
Once you enter a trade, you should know when to exit. Utilizing a predetermined stop order is an efficient method of minimizing your losses. The stop order also known as a stop loss closes the trade automatically once your loss stretches to a specific level.
Have appropriate knowledge prior to launching your forex trading journey. A good forex trader is one who understands everything that is happening in the world of economics, politics, and even the weather. This is because all these factors can have an impact on the forex markets.
Utilize Both Fundamental and Technical Analysis
What should you utilize to execute a trade? Some traders opine that fundamental analysis is the way to go, reiterating that the fluctuation in currency values is determined by the current economic data such as a country’s employment data, export volume, and GDP growth.
Technical analysis adopts the assumption that all this information is included in the currency value. Traders who prefer utilizing technical analysis opine that sufficient information is available in the market just as there are numerous participants.
Utilizing both systems, however, is the best idea when it comes to designing your trading strategy.
Avoid Over Focusing on a Pair
Many novice traders opine that restricting themselves to one currency pair is a good idea. According to them, utilizing this strategy enables them to get accustomed with price fluctuation in their preferred currencies. Of course, this approach holds some logic. Apart from exposing them to more risk, this strategy can restrict their trading activity.
Many people may not understand why holding on to single pair presents more risk. Usually, forex markets will either trend in a downward or upward direction. However, sometimes a specific currency will be in a combination pattern.
At this point, prices are likely to move in a slight range and when this occurs, trading opportunities are likely to be quite limited hence tempting you to get in extremely risky trades. Adopting various currency pairs would be a better strategy as it enables you to trade actively while increasing the chances of gaining.
Avoid overdoing it though. You could choose between 5 and 10 pairs for a start for substantial trading opportunities. Unless you are a professional trader, handling more than ten currency pairs could be a difficult task.
Prior to embarking on the forex trading journey, ensure to learn and master the forex trading rules. They will come in handy and help you avoid some unnecessary mistakes.
Making money in the forex markets is not easy especially for novice traders. Experts are categorical that having a demo trading account before finally becoming an active trader can go a long way in helping you succeed. Take your time to learn in order to avoid some costly trading mistakes.