What strategy to choose not to incur losses
Trading Code
(set of rules)
Rules of money management
Managing stop orders
Take Profit and other terms.
Trading Code
(set of rules)
Rules of money management
Managing stop orders
Take Profit and other terms.
To trade at a profit on Forex, it is no good to make rash decisions and enter the market with erratic trades. The key to success of every efficient trader is one’s own highly elaborate and time-tested strategy. In terms of Forex, a strategy is a set of rules according to which a trader speculates in the market. This code sets out in detail conditions that should be fulfilled to make a deal. Besides, a strategy includes the rules of money management, setting a stop loss/take profit, and other conditions.
Forex analytics is of great help to you to design an effective trading strategy. However, as a beginner, you may lack any algorithm for a while. So, take into account the following rules of trading in a currency market.
This is a bad idea to trade with big leverage, especially for novice traders.
It is common knowledge that market quotes on Forex fluctuate with different volatility. During the same trading day, an asset’s price could make minor fluctuations of a few decimal points of a percent. At the same time, a price change could be more than 5-10%. To boost would-be profits, InstaForex offers its clients the opportunity to trade with leverage that means virtual borrowed funds. In essence, a trader’s deposit is not credited with real money. However, a trader can manage a deal which is a few times bigger than his own investment.
Importantly, trading with leveraged funds increases both profits and risks. If you make the right forecast of a price change, you will yield an extra profit proportionate to your leverage. Otherwise, if your forecast fails, you will incur losses in the appropriate proportion. To minimize risks and maximize would-be profits, novice traders are not recommended to open positions with leverage more than 1:5 – 1:15.
How leverage works
The broker provides you with leverage of 1:10
You can open a trade worth $1000
The broker provides you with leverage of 1:10
You can open a trade worth $1000
Impose some limitations on your deposit. Do not deposit your account with all your savings.
The global currency market is hard to predict with 100% accuracy. Thus, do not downplay the scenario that you might drain your deposit. Successful trading means that a percentage of winning trades is higher than a percentage of losing ones. Unfortunately, trading is always accompanied by losses and no one is insured against this. Another advantage with InstaForex is that the broker does not allow its clients to end up in the red. Hence, all losing trades will be closed automatically.
In other words, a trader will never lose more money than the amount available on his/her deposit. If a trader invests part of his/her savings, s/he will not go broke if a deposit is lost in the end. Another tip is to restrict investment per each trade. One of the money management rules reads that no more than 1-5% of the deposit size should be invested per trade with a view to curbing risks.
Stop loss is must-do!
A stop loss is a special limit order which allows a trader to cut losses on positions. Placing a stop loss, a speculator will never lose the whole deposit in a single trade. Setting a stop loss, a trader specifies a price at which a position will be automatically closed once this level is reached. For example, a trader wants a position to be closed automatically when a loss stands at 100 currency units. Initially, there were 1,000 currency units in his deposit. If a stop loss is activated, the trader will not lose the whole deposit and 900 units will be left.
For some reasons, a trader may be unwilling to trade on one’s own. However, s/he wants to take the opportunity of earning decent money that the currency market opens up. It makes sense to try a popular and convenient strategy of mirror trading. This service called ForexCopy with InstaForex allows traders to copy positions of successful investors and execute the same trades in almost real time.
How it works
Pick one of
5 top traders from the monitoring list
Exploit service
Gain profit