Like any type of job, trading involves expenses, losses, taxes, uncertainty, and risk, and these factors must be taken into account. The key to successful deals is good planning. This is equally true for business and trading. If your goal is to firmly stand on your feet in the industry, make every effort and time to study and develop strategic plans. First, study what you shouldn’t do when working on Forex.
1) Do Not Risk Funds if You Are Not Ready to Lose Them
It is vital to understand that success is not guaranteed. Losing income is always difficult, but it usually happens at the very beginning of the journey. You should not use money defined for other purposes for transactions: educating your children, mortgages, or everyday expenses. This is a terrible idea, which can lead to catastrophic financial losses. Before trading, it is vital to honestly tell yourself that these are extra funds for you. Whether you do not have extra money, continue to save until they appear.
2) Don’t Use Someone’s Strategies
The driving force of developing a trading strategy should be your own research. Currently, there is so much info on public access that it is difficult not to take advantage of other people’s research. However, any technique may be disadvantageous. Even if it worked for someone else, it will not necessarily work for everyone. There are different trading styles, which means that one plan cannot suit everyone in a row. Finally, you must fully understand the logic of your strategy. Otherwise, you will lose your confidence and everything.
3) Learn How to Stop in Due Time
There are two main reasons to stop trading:
- The ineffective plan, during the implementation of which the trader experiences more losses than expected.
- The inefficiency of the trader: emotions, external stress, illness can affect the result.
A trader can develop a good trading plan but not be able to properly implement it. To correct the situation, it is necessary to recognize any personal problems and deal with their solution. For example, if traders do not cope with emotions, they can use an automation strategy.
Although most participants are focused on success, this activity is mostly about losses. In reality, successful traders generally assess not their possible profit, but how much they can afford to lose. Losses always happen, and despite claims that some trading plans or systems are 100% profitable, in reality, many such plans only make a profit in 40% of cases. The formula for enrichment is to earn more on every winning trade than to lose on every losing trade. Thanks to this, traders make a profit.