January 31, 2018, 7:48 am

Play the Forex markets and win by following some basic rules

by: The Financial Blogger    Category: Investing Ideas
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As little as ten years ago, if you had asked the average person on the street to describe a Forex trader, they would probably have envisaged someone along the lines of Jordan Belfort, the city slicker portrayed by Leonardo DiCaprio in The Wolf of Wall Street. In the brave new world of 2018, however, things have changed.

A large part of that is through necessity – where it used to be enough to have some money tucked away in a savings account and a half decent pension plan, these things are simply not delivering any more. Interest rates are still rumbling along at low levels, pension funds are in crisis and there is a gloomy perspective that you would do as well to hide your money under the floorboards.

So the search for alternative investments is certainly a driver. The other is the technological age. The internet has taught us that plenty of things we though mysterious are actually quite simple if you only have the right app. While true to an extent, it is as easy to lose everything trading forex as it is to make some significant returns. Here are some rules every would-be forex trader needs to follow.

Rule No.1: Only fools dive in

 

If you think you can make a killing in forex trading without setting up the basics first, you would be better off heading to the track and putting your money on a horse.

Find yourself a trusted forex broker, set up your account and practice with it in demo mode before you go anywhere near your first real trade.

Rule No.2: Keep it simple, stupid

 

According to apocryphal legend, the phrase KISS strategy was originally coined by the US Navy 50 or more years ago. Whether true or false, it is the most important forex tip you will ever follow. There is a choice of hundreds of currencies that you can trade if you really want to, and hundreds more convoluted ways of doing so. But if successful and established traders find success by following the KISS strategy, there is definitely a lesson to be learned for beginners.

Rule No.3: Avoid day trading

 

This is a refinement on Rule No.2. The hurly burly of day trading, coupled with the chance to leap in, make a killing and leap out again might sound as exciting as a night at the casino, but it also has other similarities with the roulette wheel that make it a poor choice. The problem is, there is so little in the way of useful data to inform decisions over such a short period.

Rule No.4: Winners are always ready to lose

 

Some trades go well and others go wrong, that is the way it works in the currency markets. Naturally, you want more winners than losers, but an even more fundamental rule here is that whatever happens, if a trade goes as badly as it can possibly go, you need to be able to carry on to the next one. That means following the well-known two percent rule, and sticking to it no matter what.

 

 

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