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by Finage at January 10, 2021 3 MIN READ

Forex

5 tips to be a successful Forex Trader ?

We always support you by sharing analyzes and reports. But this time, we wanted to leave the market aside and share our advice on risk management and account management as important as guessing the market direction in becoming a successful forex investor. Here are some golden forex recommendations that we think can significantly increase your chances of success if you apply them;

1-) Use Stop Loss in your trades. 

If we make an analogy like this, we will probably explain the importance of using stop loss better; Opening a no-stop transaction is like riding in a car without brakes. You won't have a problem on the straight road, but when the direction changes, you get off the road and fall into the abyss. It's like your stop loss insurance. It protects your account from disaster if things don't go as expected in the market.

2-) Do not risk more than 3%, maximum 5% of your total account.

Preferably in your transactions, and the risk of your total open transactions should not exceed 10%. Determine your volume by considering this risk management strategy according to your stop loss level. Let's sample immediately; Suppose you entered forex with an account of $ 1000. Preferably, we said 3%, so we won't risk more than $ 30 per trade. So how? Again, let's assume that based on your analysis and predictions, you predict that the EURUSD will rise and you buy at 1.15. 1.1480 is a very important support level and just below this support you set 1.1470 as stop loss. So 30 pips below entry level. In that case, the trading volume (lot) we will open should not exceed 0.1. With 0.1 lots on EURUSD, 30 pips corresponds to a risk of $ 30 loss. So your account is up to 3%. Of course, according to this account, if we consider it appropriate to put a stop loss 60 pips below the entry level, we should reduce the lot amount we will open from 0.1 to 0.05.

3-) Your risk / return ratio must be at least 1/1. 

We mean the following; If we risked $ 30 in a trade, we should expect at least $ 30 in profit. Let's continue with the example above; We bought 0.1 EURUSD from the 1.15 level and set the 1.1470 level as a stop loss. So we have to wait for the pair to rise to at least 1.1530 to make a profit. Or we should enter 1.1530 as the Take Profit level. Thus, you can take out a lost transaction with only one transaction. This is one of the biggest mistakes investors make; Waiting for a long time while the transactions are negative and closing with big losses, while closing the positive trades with small profits.

4-) Set rational expectations and goals.

Would you be surprised if we told you that the big funds managing billions of dollars see consistently 20% to 30% real profit annually as a great success? In other words, for an investor who makes a $ 1000 forex investment, this means a profit of 200-300 dollars a year. Let's say you entered the forex with an investment of $ 1000 on January 1, 2015, how much would you be satisfied if your account was on December 31, 2015? 2000 thousand dollars? We think you fly very high. The annual return of 1000 thousand dollars may seem nominally low, but if we consider that you want to achieve this return with an investment of 1000 dollars, let's remind that this corresponds to 100% annual income. Funds that have huge research and analysis departments and manage billions will be happy with 20-30%, while you expect 100% profit… It did not seem like a very attainable target.

5-) Understand this well; Even the world's largest funds and the most professional traders can write a loss. 

Remember that your analysis may be wrong, think about the cause of this loss after losses, read it, follow it, problem, continue working and improving yourself. Let's give an example like this; Even 30-year Forex hedge funds such as FX Concepts can raise a bankruptcy flag with their wrong analysis and investments. Keep in mind the saying "The market is always right". Our goal should be to try to predict where the market is going, not to fight it or stubbornly. If you follow the above recommendations successfully, it means that you have taken a huge step towards success with the contribution of some experience. Investment information, comments and recommendations contained herein are not within the scope of investment consultancy.


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