"Bulls make money, bears make money and pigs are killed" ("Bulls make money, bears make money and pigs are slaughtered")
Institutional traders, banks, and even retail brokers call hog beginners into the market. Most new traders lose their first commercial accounts because of certain facts they could have avoided. The "secret" (that everyone knows) is that 90% of traders lose money in the long run. And the surprising reason is not that they do not know how to trade, but that they do not understand how to properly manage the risks.
Not having good capital management is the main enemy of a trader who starts and this can be improved with practice and discipline. See below our 10 suggestions for beginners and improve your skills as a trader by following them.
1. Acquire basic knowledge of the foreign exchange market
Negotiating the currency market is not so simple, but it is not so complex either. Knowing how to sell or buy a currency pair does not mean knowing the currency market. If you start now, it is important to learn through a forex course that provides you with in-depth knowledge and presents problems in a structured and progressive manner.
There is no shortcut in the process of becoming a lucrative trader. There is no "holy grail" on the foreign exchange market. Do not waste your time looking for one. You do not need it.
The first step in any course is to teach the basics of the currency: what is pip, spread, swap, leverage, lot size, trading platform, etc.? After that, they should teach different pairs, correlation, types of graphics, candle motifs and much more.
Then, a good course will teach you the psychology of trading and risk management, two essential points. Only then should you start thinking about your trading strategy.
2. Adopt risk management strategies and capital management
To what extent is a professional trader defined by his quality in risk management and his capital. It is the number one in the business of any risk market. You stay in business only if you have risk management rules. Nothing can save your account if you do not follow a disciplined risk management method. There is nothing absolute about the markets, the job is to understand probabilities and risks.
71% of transactions on a losing account are usually in profit. Amateur traders "usually break the account" by using high leverage in their operations and with that one or two losses can play all the work "on the water". They work too much without doing the proper calculations. Do risk in an operation only the amount that will not hurt much to your account if you lose it. Otherwise, sooner or later, you will eventually destroy your account.
I repeat: if you want to "survive" in the long run, you have to follow risk management rules. There is not any other way. The sooner you learn this, the better for you.
3. Learn a strategy based on the basics and master it
Do not stay strategy-wise or try to do many strategies at once. You must learn a simple trading method based on the stock price. A good trading strategy always focuses on risks and losses. A trading plan is a set of rules for filtering inputs to minimize risk and maximize profits.
All lost traders have a similar way of thinking: they depend on indicators rather than the price itself. An indicator can work for the person who created it but not for you. Learn price action strategies and charts to become a successful trader.
4. Create your trading log
Owning a newspaper in which you write your traditions and emotions may seem like a little extra work, but you'll regret it if you do not have one. You lose money if you make a mistake and a newspaper will show you your mistakes at a glance. With a commercial newspaper, there is a good chance that you will increase your success rate considerably.
5. Try longer delays
You must operate a longer period (like the calendar) if you want to succeed. Many traders have the misconception that they are finding more business opportunities in a shorter period of time and are earning more money. The reality is exactly the opposite. Operating more frequently increases your risks and costs. In addition, price action in smaller graphical times is less reliable.
Cost-effective daytime operation is more complicated and requires more practice. I highly recommend beginners to prefer daily charts.
6. Stop following other people
Stop following other traders blindly. They can operate a different strategy and schedule different from yours. You must know your strategy before.
You can practically ignore the news if you are a "technical trader", especially the big TV networks. Remember, they are often journalists or analysts, not traders. Think independently High performing traders generally think differently about "pack".
7. Know that the real world is different from Holywood
Be realistic, do not dream of making a $ 1 million profit by investing $ 1,000, which is virtually impossible. If it were possible, Warren Buffet would have made ten trillion dollars every year. Traders who want to enrich quickly are getting poorer even faster.
A strategy is excellent if it can generate more than 5% per month. Even professional traders are not profitable every month. Luck helps the game or the lottery, but it will not help you in the long-term markets.
8. Choose the right broker
Some brokers have high margins, expensive swap rates and other restrictions that can significantly increase their costs. Compare the best runners, choose the one that best suits your style. Good brokerage is important. Do not choose a broker just because someone told you about it.
Do your due diligence, check the rules, the jurisdiction in which it is located and choose wisely.
Tip: If you're having trouble choosing a brokerage that's right for you, check out our tips on how to choose a good currency broker.
9. Understand that the less you operate, the more benefits you will have
Negotiating with smaller volumes often makes you more profitable in the long run. Expect big profits by using high leverage is one of the main reasons why amateur traders take all their capital. Small but steady gains will lead to success.
In addition to correctly sizing the "size" of your positions, remember that the more you negotiate, the higher the costs. You do not have to enter all the trade to be profitable. Stay patient and disciplined, control your emotions.
Controlling your emotions does not control your joy or sadness when you win or lose. It changes the way it interacts with markets, when you decide to open and / or close your positions. Your only job as a trader is to protect your capital, making profits should not be your priority. The advantage is a consequence of the loss of little when it is false.
10. Learn where you are going before you enter
The use of stop loss (SL) is essential for a trader. It is true that many beginners are so afraid of losing that they put the stop very close to the entrance. It does not help you to preserve your capital. Using a fixed number of pips for the SL can not be a good idea either. Understand the price action and give some space for it to move. The important thing is that when your SL is reached, you are sure that the initial analysis did not work (and it will happen several times, that's normal). Use a smaller lot size if the ideal SL is a very large part of your capital.
Never move your stop loss when you notice that the price is close to it. Do not panic with the losses. It is used for exit point in profit (profit taking). Have a plan and stick to it. Remember that a strategy should not be evaluated with one or two operations.
conclusions
Our idea with this post was to bring some tips that can help you survive longer in this crazy financial market. If you follow the points we have presented here, particularly with regard to risk management, you have everything to do. Get a good education (remember: education is an investment), learn price action, keep a trade journal and success will come.
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