What will we need from a currency trading tutorial and other forex courses? Just like with the drivers, understanding how to operate the system is only a tiny part of our training. Risk management is what’s most sure to block us from finishing up in the ditch. We’ll take an example. Say you have a system that makes a median of 50 pips profit on winning trades and thirty pips loss on losing trades, including the spread. Around 50% of its trades are winners. It’s obvious this is a good system. It should make profits in the long term. However, if you start out thinking you have got a 50% possibility of success so you can risk half of your funds on each trade, you would be making a big mistake. 50% winners does not necessarily imply that every loss will be followed by a win and vice versa. There could be 2, 3, four, perhaps on occasion even 10 losses in a row. A better risk in this circumstance would be five percent or perhaps two percent. At 10% the trader would potentially still be wiped out sooner or later. You can see from this work why it is important to take a FOREX trading tutorial of some kind before you start trading.
Posts Tagged: scalping
21
Jan 10
The Best Way to Trade Forex
Many beginner traders wonder what is the best way to trade Forex. What is the easiest way to start and what is the safest way to do it. Is it using expert advisors and robots or signals? Is it scalping, or trading long-term?
I’ll try to give a definitive answer to this question. Even though there are different advantages and disadvantages to any Forex trading strategy, as well as there are proponents of each method, I’ll give my opinion about what fits best for the beginners.
Let me cover the most popular methods and how I think they fit the beginners. First of all, there are the automated trading robots. The idea is that a software trades for you. You’d think that such a software would be the best option for a beginner, but what sounds too good to be true, most likely is. All of these robots are flawed and they don’t trade that well, a lot of loss happens. That’s not exactly what a beginner would want.
Signals are very similar to robots. The only difference is that you have to open and manage the trades manually. Again, these aren’t prefect and there are just more chances for beginners to make mistakes.
That leaves us with manual trading strategies. Yes, you need to learn to trade manually, and it is a tough skill to learn. But if you want to trade, you just have to learn it. So we’re only left with different trading strategies. There are 3 main strategies – scalping, intra-day trading, and long-term trading.
Scalping is the strategy of the highest risk, even though it enables the fastest profits. The risk is really high, though, so I would not recommends it for beginners.
Intra-day trading (meaning you open and close trades within the same day) holds less risk than scalping and to most traders it is the preferred option. It enables daily profits and the losses can also only happen just a few times per day. It can be a great way to trade not only for expert traders but intermediate too.
However, I would recommend long-term trading for Forex beginners. Other faster methods are too fast. Several swings can happen on 30 minute or 1 hour charts and they require fast decisions to be made. That’s not a perfect scenario for a beginner. On the other hand, long-term trading (in Forex the term “long-term” can mean a few trades per week) allows a “slow” market and a lot of time to research and make decisions. That I think is perfect for beginners.