The currency market is now a click or a tap away. Through modern platforms and apps, users may connect to the vast exchange where over 6 trillion US dollars circulate between institutions and individuals. Liquidity and profit potential are huge. However, success only comes to those who can learn and follow consistent strategies. Here are key recommendations from online trading professionals.
Table of Contents
Finding the Most Suitable System
A strategy has two distinct objectives. On the one hand, it serves as a hedging tool for institutional traders – i.e., limits risks and potential losses. On the other hand, it facilitates prediction in retail trading, making speculation profitable.
Developing your own strategy is doable, but laborious. Until you gain sufficient experience, take advantage of existing approaches. Forex has been around for decades and professionals have already devised quite a few methods. Rookies in Nigeria are advised to play it safe and explore the available systems.
Do not expect immediate results from a single course of action. No ready-made strategy is guaranteed to be profitable. Choose a style that fits your personality and resources most of all. If one system fails to meet your expectations, switch to an alternative. Gradually, you will be able to identify the most convenient method.
Components of Strategy
Any course of action must incorporate three elements. These must be analyzed for each trade regardless of the instrument. Note down the following:
- volume,
- liquidity,
- volatility.
Fund Management
It is important to comprehend the scope of risks and opportunities. Identify the optimal size of positions based on available resources and use leverage carefully. Stop Loss, Take Profit, and trailing stops are examples of features that limit risk. However, it will never reach zero – any trade can result in loss, especially if it is based on emotions.
Different instruments bring different benefits. A universal way to limit risk is through diversifying. The more assets are included in your portfolio – the higher your potential returns and the lower your potential losses.
Asset allocation may be based on different methods, but its value is undeniable. Forex brokers provide access to stocks and derivatives like CFDs. These instruments allow profitable speculation on prices without owning the underlying assets. Learn more about what is CFD in Forex and expand your opportunities.
Time Management
How much time are you willing to devote to Forex? Different styles require different resources. Day trading is like a full-time job as you need several hours daily. Generally, preparation should take a couple of hours, while trading itself will take at least three.
Here, profits rely on momentary changes – you need to monitor the market closely. Do not expect to achieve much if you squeeze trading into brief periods. Time is of the essence.
Never Stop Learning
The market is always reacting to news and its participants’ behavior. This means that learning never stops. Every day, fresh information appears and new decisions are made. From interest rates to international diplomacy, the rage of drivers is broad. Experts receive relevant data through sites, apps, and plugins.
Know the Best Hours
Experts know when volatility is the highest and take advantage of these phases. Usually, rates are the most unstable once the market opens. The most hectic activity is observed within the first 15 minutes. This is when the trading community reacts to information released since the previous closing bell. Capitalizing on volatility requires experience, so newbies are advised against it.
Copy Trading
Another opportunity to learn is by delegating decision-making. Reputable brokers like FXTM allow you to choose a strategy manager. This experienced trader will manage a portion of your funds. The arrangement means that all actions of the copied trader are replicated in your account.
For clients, the scheme brings profit without participation. It is also a chance to watch and learn. For the expert, successful decisions result in a monetary reward.
Example: Scalping
Basically, a trader dips in and out of the market a few times per day. In favorable conditions, your profit is moderate but steady. The more experienced the scalper – the more frequently they trade in and out.
This strategy is not for the faint-hearted: it requires patience and perseverance. Although there is little fun, it is the safest and results may be impressive. Of course, if you do not mind frenetic action.
