Start With a Practice Account (Part II)

Understand from the get go that any action you take on a trading platform is basically your responsibility. You may have meant to click Buy but instead you clicked Sell. No one knows for sure except you.

Instead of jumping into live trading, first practice on your demo account. Double your demo accounts three times in a row only then trade live if you don't want to blow your account repeatedly.

You should know that when the prices are adjusting quickly like break of a key technical level or price point or after a data release, attempts to trade at the market can sometimes fail in very fast moving markets. You must understand that part of this stems from the latency effect or time lags on the internet.

The time lag between the platform reaching your computer and your trade request reaching the platform server can cause your trade to fail in fast moving markets. You can experience these time lags so that you don't learn them during real trading by first practicing on your demo account.

You opened your position and now you are in the market by pulling the trigger. The forex market isn't a roulette wheel where you place your bets, watch the wheel spin and simply take the result. Don't think that you have pulled the trigger and now its time to sit back and let the market do its thing.

Always trade with a plan! Currency market is a dynamic and fluid environment. New information and price developments are constantly creating new opportunities and changing previous expectations.

You should know in advance where to enter and where to exit every trade. You can improve your chances of trading success by thoroughly planning each trade before getting caught up in the emotions and noise of the market.

How much managing your open position you need, it depends on your trading style and the overall market conditions. You will generally set wider stop loss and take profit targets and adopt the policy of set and forget if you are following a medium to long term trading strategy based on swing trading the currency markets.

But a lot can happen between you open a position and the price action hitting your target level. Staying on top of the market is still a good idea even for a longer term trade. So no matter what your trading style, it pays to keep up with the market news and price developments while trade is active. Unexpected news may suddenly impact your position. So you may require making changes to your trading plan.

We are referring only to reducing the overall risk of trading by moving the take profit or stop loss order to reduce the risk when we talk of making changes to the trading plan. You need to learn and experience these things on your demo account first because if you try to learn them on your real account, your account will be blown up in a matter of hours or days.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. First Trade Your Forex Demo Account. Learn Forex Trading

Share Article

Sponsored Links

Related Articles