Forex trading rules for beginners – Now that you have traded in Forex on the ground using a virtual account for several months, for example, and you have the minimum level of experience, and after you have developed a trading method that depends on a specific method of analyzing price movement, and this method has proven to be effective with good practical results in the account default for a relatively long period of time.
Forex trading rules for beginners
You are now ready, in principle, for actual trading in Forex, but you are still considered a new investor and you still lack the experience of expert investors, so we devote this article to the most important tips and basic rules in Forex, as expert investors in the market unanimously agree that these basic rules in Forex help in Your success as a new investor and prolong your life in the forex market.
And applying Forex trading rules for beginners, you set an amount of money to trade with, chose the brokerage firm, and opened a mini account with it, to start from now on your real journey in the world of speculation in the international currency exchange.
Use a stop loss order
Forex trading rules for beginners It is from Forex trading rules for beginners in stores always trade with stops. On the Order Types page, we have talked about the stop order and explained the basic rules for dealing with it. In fact, among all types of orders, the stop order is the most important and necessary.
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Why Forex trading rules for beginners?
Because the order to limit the loss is the main line of defense in your protection, so no one believes his expectation all the time. You may exert the required effort in the analysis, but something happens that makes the price movement start to oppose you, as you start to face the loss with every point that the price opposes you. This is something to be expected in a highly volatile market such as the currency market.
Here comes the role of the limit loss order, which will close the deal before your loss multiplies to a large extent.
Placing a loss limit order before entering the deal is one of the characteristics of the professional trader. After the trader analyzes the movement of the price of a currency and decides on the basis of this analysis to enter into a deal, whether it was buying or selling, he will determine in advance the point at which he will close the deal in case of loss before entering the deal.
For example, by saying: “I believe that the price of the euro will rise shortly, so I will buy it at such and such a price, but if it does not rise as I expect, I will close the deal at a loss at such and such a price.” This is because pre-determining the exit point at a loss prevents traders from falling under psychological influence “hopefully.” Return the price later. Commitment to this is often the difference between successful and unsuccessful stores.
Do not lose more than 5% of your account in one trade
Forex trading rules for beginners When you decide to enter into a transaction, you will determine the point at which you will enter a buyer or seller of a currency. And it will determine the point at which you will exit in the event that you reversed the price and suffered a loss. The amount that you can lose in a transaction must not exceed 5% of your total account.
So what does that mean?
Let’s assume that you have a regular account with $10,000 and you decide to enter into a deal. This means that you have to calculate the price at which you will come out in the event of a loss, so that the loss does not exceed $500, which is equivalent to 5% of your total account.
For example: if you had bought 1 lot of sterling at the price of GBP/USD = 1.4500 on the basis that the price would rise shortly, then where would you place the order to limit the loss? You would place it at GBP/USD = 1.4450. Thus, you limit your loss to $ 500, which is equivalent to 5% of your account.
So what if I bought 2 lots?
If the price reaches GBP/USD = 1.4450, your loss here will be $100 because you have 2 lots, not 1 lot, and this amount is equivalent to 10% of your account. Therefore, you have two options: Either you approach the exit point in case of loss to the price: GBP/USD = 1.4475, or you don’t. You originally buy only one lot.
And we mentioned when talking about Forex trading rules for beginners limiting the loss that you cannot place it too close to your entry price, and 25 points are considered very close to your entry point, so it is not permissible, then, to place the order to limit the loss at the price of 1.4475, as you have no choice but to You buy more than one lot.