Trading For Beginners: May 2020

5 FOREX TRADING HABITS THAT LOWER YOUR RISK EXPOSURE

In trading, it is very easy to get lost in the game. You get on your trading platform, try to get some pips, and in the process, you usually forget the most basic risk management practices.

Here are five common habits that might help in limiting your risk exposure.

1. Double, triple, even quadruple-check your orders

Electronic trading has made it very easy for traders to execute trades. However, because of the ease and simplicity of electronic online trading, the chances of erroneous commands also rise significantly.

Having a well-thought-out trading plan would be useless if you do not correctly input your orders.

In May 2010, the financial market experienced a huge crash due to a “fat finger” event.

A trader in a large trading firm mistakenly sold $16 billion worth of future contracts instead of just $16 million.

Other traders who saw the order thought that something big was about to happen, so they sold too.

This resulted in a collective intra-day drop of $1 trillion in the U.S. equity market. Needless to say, the trading firm, as well as those holding on to stocks, lost a lot of money.

Double, triple, even quadruple-checking your order is very important in avoiding costly and unnecessary blunders.

Make reviewing your commands part of your routine. It will just take a couple of seconds of your time!

2. Always have a trading plan

You’d think that all traders would have a trading plan by now. I have talked about having a trade plan many times in my previous blog posts. Unfortunately, a lot of traders still trade impulsively. There are traders who trade completely on emotion and irrationally get into trades without thinking it through. At the very least, you should have a plan on where to enter or exit your positions. By doing so, you limit disastrous emotional reactions to adverse price movements.

3. Take profit on your winning trades

Another commonly overlooked risk management practice is taking some of your profits off the table while the price action is still in your favor. I know it’s tempting to ride a trend with a full position all the way to your profit target, but taking off a part of your position limits your exposure to potential volatility. After all, the saying “The trend is your friend… until it ends” didn’t come from nothing, did it? Let’s take the STA strategy or any other scaling technique for example. Let’s say your trading plan calls for adding to your original position and moving your stop loss after a certain number of pips. If you take some off of your position midway, you may at least end up with a small win even if that trend suddenly reverses on you.

4. Take a step back from trading

Do you feel like you’re in a trading rut? Are your fundamental and technical analyses off more often that you’d like to admit? If you said “yes” to these questions, then you probably just need to take a little time off from trading.

What’s good about staying away from the markets completely is that you’re not emotionally invested in any position.

This usually allows you to reset and see market themes and chart patterns from a renewed point of view. And sometimes, a break will help you realize what you did wrong in your last couple of trades. So take a step back, try to resist the lure of pip-making for a while, and you’ll most likely come back with a refreshed mind and a new and improved trading plan.

5. Withdraw your money regularly

While turning a couple of thousand bucks to a multi-gazillion trading account is a big confidence booster in trading, it’s still advisable to withdraw some of your money regularly. For one, additional capital usually exposes you to impulsive decisions like trading with larger positions or over-trading. Unless your trading goal calls for increasing your position sizes or your number of trades, withdrawing some of your money is one of your best bets at limiting risk. Besides, haven’t I told you often enough that being consistently profitable requires your focus on the process and not on profits? Take some of your moolah from time to time; take a vacation with your partner or your friends; buy something fancy for yourself, and enjoy the hard-earned fruits of your labor.

Article Source: https://www.babypips.com/trading/forex-trading-habits-to-limit-risk

HOW TO GET STARTED WITH FOREX THE REAL WAY

If you ever wanted to trade Forex, you may have read up and gained an understanding on how it works but not how to get started. Reading books can give you the knowledge of what Forex trading is but not necessarily what it takes to become a Forex trader.

Here you will find five helpful points to consider and become familiar with to get you started trading Forex.

1. Understanding Forex Trading
You obviously must understand what Forex trading is and how it works. In the least, you need a basic understanding of what is going on, when to buy and sell, what the terms mean, and the various trading strategies available to you. You can get started trading Forex in under a day, but without a plan or knowledge on how it works, you set yourself up to fail.

There are numerous methods to learning Forex trading; you can read books, take online courses, or join a membership community of experts to get real-time answers. But pay attention to the information you consume:

· Be wary of sources that make income claims or say you can quit your day job and never have to work again due to the miracles of Forex. You don't want a gimmick education. Fads don't last as long as real preparedness and strategy.
· Book sources should be recognized authors and experts in the field of Forex. There are plenty of reliable sources; do your research to vet which authors are worth reading.

Online courses offer another avenue for learning Forex trading, but nothing beats experience and the ability to speak with like-minded traders who started out just like you. You can't ask questions or throw ideas at books and online courses hoping for answers or feedback like you can in a global community of Forex traders.

What if there was a place that can help accelerate your learning with its suite of community-backed questions and forum posts, daily live streams where you can get real-time answers, strategies, indicators and trade signals. We have a global community of Forex traders and other learners who have started trading that can give you insight and answers to many Forex questions you might have. Real life people giving hands-on advice can be helpful when you want to find answers right away. We also have a Trade Academy where you can access hundreds of educational Forex videos anytime you want.

2. Strategy Development
You should never start a new financial adventure without a plan. Once you understand the basics and terminologies of Forex, you should make a strategy. A Forex trading strategy outlines what your intents are with your trades: when you will buy or sell and trigger points, for example.

When you first enter Forex trading, you should use the K.I.S.S. (Keep It Simple Stupid) system; do not get overly complex right away. Experience is the best education; get some trading under your belt first. Your strategy should be basic to begin with and can develop into something more complex over time.

There is no perfect strategy; when you develop yours, you must consider this fact and expect some losses but be prepared for them. With experience you will be able to evaluate your strategy and know what has worked in the past in order to adjust it.

The best practice you can learn is back-testing your strategy. Back-testing will not only help you confirm your strategy is worth implementing, but it can also give you the confidence to start with live money sooner.

Demo accounts you can do back-tests on, but to get the best use, you must not waiver from your strategy outlines. A demo account is a great place to start because you don't have to risk your own money right away. The downside is people lose interest too quickly because the perceived return is not available; but part of learning is hands-on training. You need to pay attention to price movements and how they play against your strategy. Once you have proven to yourself that your strategy is viable, you can transition into real trading.

3. Get a Broker
When you start trading Forex for real, you need someone to execute the trades on your behalf, or what is known as a broker. There are countless brokers to choose from so you will want to do your research and confirm some information before starting with the first result that appears in your search engine results. Some things to consider:

· Extreme Leverage: Avoid brokers who will offer large percentages of profit returns for your investment; they know the higher margin prospects are more likely to draw you in, but they never tell you how unlikely it is you will ever see those margins. The broker gets his pay, but you end up losing money.
· Commissions: Always know what commission your potential broker expects; some will charge extreme amounts.
· Spread: A decent broker will offer a tight spread; this means the difference between the buying and selling price is low which makes the cost to trade low.
· Location: Depending on location, verify the broker you like is regulated by a certain jurisdiction.
· Customer Service: Your broker is going to be handling large amounts of your money and making trades on your behalf; it is important that they are relatable, available, and reliable. A good broker will provide a speedy deposit and withdrawal when you need it.

4. Low Leverage
Leverage is money you borrow from your broker to increase your trading position. As a beginner, you should start out with a low leverage so you get the experience of a live trade with wins and losses without having to consider what you made overall. It helps you get your feet wet and avoid unnecessarily high risks.

5. Write a Plan
Your work and experience are a waste of time if you don't have a written plan to track, replicate, and alter based on your results. Your plan should include a list of all your trades. You can keep a physical plan or a digital one, but it should be handy.

One challenge I like to encourage beginners to try is the 25 trade challenge. You take your simple strategy and apply it to 25 trades without faltering from your plan. Your strategy should be one that you think is ready to go live; it should include when you are going to buy and sell, when to take profit, when you are stopped, and how to manage risk. Win or lose, you should execute your strategy the same way for 25 trades. Many fail because they deviate from their plan.

One important fact to remember is we all make a losing trade, but it isn't a waste of time or money; the knowledge you gain is worth the loss if you keep your loss prospects low. You should have an understanding as to why it lost so you can adjust for it in later trades. If you quit prematurely or ignore your losses' learning opportunities, you could lose more than you wanted or even should have.

If you struggle with getting started, take each point a step at a time; don't move to the next point until you have built a foundation from the previous step. These are sound strategies that will help you get started with Forex trading.

Article Source: http://EzineArticles.com/10274593

8 MISTAKES TO AVOID IN FOREX TRADING

It's exciting to trade in the FX market, especially if you have access to the Internet. All you need to do is open your trading account to get started in the biggest financial market of the globe. However, if you commit the following common mistakes, you may find it difficult to achieve success. Read on to find out about some common mistakes that you may want to avoid.

Extreme Leverage

In the FX market, leverage may be as high as 1:500. While it allows you to trade a lot of money with the hope of huge profits, it also comes with a risk of huge losses. Therefore, it's not a good idea to use extreme leverage or you may end up suffering from huge losses.

Over Trading

If you want to grab a lot of opportunities with extreme leverage, you will be more likely to make mistakes. This may cause loss in the end. In fact, over trading may cause improperly executed trades. You don't have much time to react when the trade losses continue to go up.

No Trading Plan

It's important to have a trading plan for success in the world of Forex trading. If you follow the plan, it can help you control the risk.

Relying on Automated Trading Apps

Often, beginners look for software to predict future trends. You can find a lot of software that claim to make predictions for you. The fact of the matter is that this software can hardly help you predict the future.

Not Following the Trend

It's important to keep in mind that short-term movements are random by nature. Therefore, they are the indication of the overall trend. Therefore, attempting to follow a short-term movement for a long-term is not a good idea. So, what you need to do is allow momentum to be your guide in Forex trading.

Trading with Zero Experience

If you want to be a successful trader, you may want to improve your trading skills. To get started, you can use a demo account practice. This practice account will help you get familiar with the world of Forex trading.

Emotional Trading

Another common mistake is called emotional trading. If you trade emotionally, you can end up making wrong decisions. This is one of the many reasons why people lose money while trading currencies. If you have a plan in place, you can control your emotions and focus on your goals.

Lack of Discipline and Patience

Sometimes, traders follow impulse trade and don't allow the setup to establish. If you predict trades like this, your attention will be diverted from a set trading plan or strategy. No matter how profitable your strategy may be, you can't earn a profit unless you follow discipline. If you be patient and follow discipline, you can enjoy lucrative trades.

Conclusion

Apart from these factors, there can be a lot of other factors that may prevent you from gaining success as a trader. Therefore, it's important that you avoid these common mistakes and get more knowledge.

If you want to achieve success in the world of Forex trading, we suggest that you check out SA Shares for more information.

Article Source: http://EzineArticles.com/10296010

HOW TO TRADE WITH ULTIMATE OSCILLATOR — STEP-BY-STEP GUIDE FOR BEGINNERS

IQ Option is one of my absolute favorite platforms for trading and below we will have a look at the Ultimate Oscillator that can be used as part of your trading.

Ultimate Oscillator (UO) is a momentum indicator that combines short-, medium- and long-term price action into one analysis tool. There is Awesome Oscillator, Pretty Good Oscillator and then there is Ultimate Oscillator. What’s the difference between the three and why to use this particular indicator? Read the full article to learn more.

How does it work?

As most oscillators, the indicator is a combination of three lines — the indicator line and two horizontal levels: 30 for oversold and 70 for overbought. Unlike most other momentum oscillators, Ultimate Oscillator is using not one but three distinct time frames to make its readings more accurate and prevent the formation of false divergences.

Each time frame is assigned with a weight of its own, with the shortest receiving the most weight. Longer time frames, although not as important in terms of calculation, are nonetheless factored in. The ultimate goal of this setup is to eliminate false divergences (which are quite common among momentum oscillators). It can be said that UO is an upgraded, yet lesser-known version of Awesome Oscillator.

How to use in trading?

This oscillator can be used as a measure of buying/selling pressure. The general rule tells the following: when the buying pressure is strong, the indicators goes up. When the buying pressure weakens, the indicators will go down.

A divergence is the difference in the direction of the general trend and the indicator itself. When the prices make new lows and the indicator doesn’t, a bullish divergence is observed. When the prices make a higher high and the indicator fails to do so, a bearish divergence is observed.

According to Larry Williams, the man behind the indicator, there are certain criteria for entries/exits:

A buy signal is received when

1) a bullish divergence is formed

2) the oscillator has fallen below the 30 threshold and

3) the oscillator then breaks above the highest point observed during the divergence.

Bullish divergence identified by Ultimate Oscillator

A selling signal is received when

1) a bearish divergence is present

2) the high of the divergence is above the 70 line and

3) the oscillator then falls below the lowest point observed during the divergence.

Bearish divergence identified by Ultimate Oscillator

As always, you should consider using Ultimate Oscillator in conjunction with other indicators and remember that no indicator is capable of providing accurate signals 100% of the time. All indicators can and will provide false signals from time to time.

How to set up?

When working with IQ Option, setting up the Ultimate Oscillator indicator is easy. Here’s what you need to do:

Click on the ‘Indicators’ button in the left-hand bottom corner of the screen and go to the ‘Momentum’ tab,

2. Choose ‘Ultimate Oscillator’ from the list of available indicators,

3. Without changing the default settings hit the ‘Apply’ button. Experienced traders can adjust Period 1, 2 and 3 to their liking as long as they understand the principles behind the indicator and the way it is calculated.

The indicator is ready to use!

Now, when you know how to set up and use Ultimate Oscillator in trading, you can try it and see if this indicator can become a part of your trading strategy.

Article Source: https://blog.iqoption.com/en/how-to-trade-with-ultimate-oscillator-step-by-step-guide-for-beginners/