In as much as Forex trade involves many risks, it is a potentially profitable business that can generate you a lot of revenue. Even if you work full-time, you can find the time to trade in this lucrative business to supplement your income no matter what your schedule is like. As long as you have a small amount of capital, all it takes to succeed in this trade is a deep understanding of Forex trading market psychology, self-discipline and smartness.
Forex trading market psychology is about understanding the way you respond psychologically to the stresses and pressures of the trade. By learning how to control your emotions, you get to have a clear mind which is essential to make rational decisions. Also, you need to limit yourself to currency pairs which trade when you are available for trading and adopt strategies that do not need portfolio monitoring. Here are a few tips and hints which can help you to become a discipline Forex trader;
1) Select the Right Pairs to Trade
Even though Forex trading takes place day and night seven days a week, it is advisable to operate during peak volume hours to secure liquid. Liquidity is the ability to sell stock in the market without affecting its price and this is easier done during peak hours when the market is most active. For instance, if you work an 8 am to 4 pm job, you will be available for trading either early or late in the day. High volume may crop up either in the early hours or late hours of the day depending on the currency pairs you have selected. As a beginner, always trade the dollar against other types of currency as it has a wider liquidity.
2) Set Up an Automated Trading System
You can choose to trade on your own or to go for an automated trading program to do the work for you. A wide variety of these programs with an assortment of functions are available on the market. There are those that can monitor currency performance in real live market time, place market orders, be aware of profitable spreads as well as automatically order the trade. The “Set and Forget” program is recommended for beginning intraday traders who would want an opportunity to get familiar with the trade first before investing serious amounts.
3) Be Dispassionate and Disciplined
If you choose to make your own decisions instead of relying on an automated system, discipline and dispassion are essential to your success. You are advised to take profits when they are gained rather than expecting bigger profits and wider spreads. This needs some level of self-discipline in fast trending markets in which beneficial spreads are widening. Take profits when you can as a trend might change suddenly and be affected by certain external factors which as a part-time trader you may be unaware of.
4) Start with Small Amounts
As a beginning part-time trader, you are advised to start with small amounts of currency to avoid massive losses in the event that you make a mistake. You could open a mini Forex account with as little as $2000 and control 10,000 currency units.
With the Forex trading leverage available for traders, you could make massive profits or losses. Due to this, you need to be very careful when it comes to borrowing money from lending institutions in order to purchase currency lots on margin. You are advised to consult a professional before proceeding.
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