As anybody knows anything about trading on the Forex markets realizes, Forex is a high risk market that presents endless opportunities to people who are prepared to exploit them. Here are some of the things that it takes to be successful in these markets:
- a patient long-term approach which focuses on incremental accumulation of profits instead of going for the big deal
- The willingness to lose money some of the time, because you can never be 100% right
- The ability to manage your money and your downside to limit your losses
- The determination to trade in a disciplined fashion to keep your emotions separate from your business decisions
What all this really means, especially for a beginner is that a long-term strategy needs to be carefully worked out and faithfully implemented. It is also working out the strategy, you also need to be familiar with the concepts of stop loss and take profit. Paradoxically, the key to making money in the markets is firstly to determine what you are prepared to lose on each position. This is called a stop loss and when you stop loss limit is reached, you should close out your position immediately. Emotionally, you may be tempted to hang on to a losing position in the hope that the market return. But you are really exposing yourself to an open-ended and unquantifiable loss. Trading discipline demands that you set a stop loss for each position you take and honor the stop loss scrupulously. Take profit is the reverse when you set a spread that you would like to earn on a particular position instead of giving way to greed.
Jack is the developer of Forex Correlation Code Review, the software. He is also a expert in the Forex Correlation Code .
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