How To Make Safe Trading Like Expert

Trading in financial markets can be both exciting and rewarding, but it also carries risks. Whether you’re a beginner or an experienced trader, understanding how to make safe trades is crucial. In this blog post, we’ll explore strategies to help you navigate the world of Forex, CFDs (Contracts for Difference) on stocks, and metals like a pro.

Never stop learning

You cannot expect to be a successful Forex trader if you don’t dedicate time to learning about the Forex markets and how to trade them. The next of our Forex trading tips, therefore, is to make sure you educate yourself thoroughly on the art of trading! 

Studying does take time and effort, but your trading will undoubtedly benefit. And the learning never stops. No matter how experienced you are as a trader, there is always more to learn. So, keep reading the news, analysing market trends and make sure you don’t forget the basics.

Free Online Trading Course 

If you’re a beginner trader looking for a place to learn all about trading, This trading course, might be the perfect place for you! Also you can watch this wbinar after free registration.

Copy Trading from Expert

You don’t need to be an expert to earn like one. Or spend hours in front of the charts. At least, not anymore! Just follow the experts and copy their trades. This allows you to participate in the markets, while continuing your trading education, and developing your own strategies. you can follow more than one expert at the same time.

Do Your Homework

Just because forex is easy to get into doesn’t mean due diligence should be avoided. Learning about forex is integral to a trader’s success. While the majority of trading knowledge comes from live trading and experience, a trader should learn everything about the forex markets, including the geopolitical and economic factors that affect a trader’s preferred currencies.

Homework is an ongoing effort as traders need to be prepared to adapt to changing market conditions, regulations, and world events. Part of this research process involves developing a trading plan—a systematic method for screening and evaluating investments, determining the amount of risk that is or should be taken, and formulating short-term and long-term investment objectives. You can find latest news, market insights, fundemental insights, technical analysis, economic calender, and more with a free registration.

Find a Reputable Broker 

Set some time aside to research different brokers, read their reviews and ensure that you choose the right one for you and your trading style. Here are some important factors to consider when choosing a broker: 

• A range of different trading instruments
• Competitive spreads 
• A good, reliable trading platform
• Access to leverage
• Client fund security
• Excellent customer service
• Educational resources

As well as these factors, and others, it is particularly important to make sure the broker you choose is authorised and regulated by an internationally recognised authority. 

Use a Practice Trading Account

Nearly all trading platforms come with a practice account, sometimes called a simulated account or demo account, which allow traders to place hypothetical trades without a funded account. Perhaps the most important benefit of a practice account is that it allows a trader to become adept at order-entry techniques.

Few things are as damaging to a trading account (and a trader’s confidence) as pushing the wrong button when opening or exiting a position. It is not uncommon, for example, for a new trader to accidentally add to a losing position instead of closing the trade. Multiple errors in order entry can lead to large, unprotected losing trades. Aside from the devastating financial implications, making trading mistakes is incredibly stressful. Practice makes perfect. Experiment with order entries before placing real money on the line.

Plan your trading and trade your plan

All trades should be planned with risk, reward and capital allowances taken into account. Any trade that is taken on the fly is nothing more than a gamble.

Many Forex traders are guilty of being too eager to start trading straight away without setting out a clear plan beforehand. As the old cliché goes: “failing to prepare is preparing to fail..” and Forex trading is no different. 

You can think of your Forex trading plan as a set of rules for you to follow when trading and how you will implement them. Defining these rules beforehand and writing them down will help you stick to them when you start trading. Here are some questions to ask yourself when creating your plan: 

• What are your trading goals?
• What is your trading style?
• How much time will you spend trading each day?
• What will determine your market entry and exit?
• How much can you afford to risk?

Creating a trading plan can help prevent you from overtrading, which can result in a lack of concentration and reckless trades. As you develop your trading plan, set yourself a maximum number of trades you will make per day or week. 

Choose your forex trading style carefully

There are four main styles of forex trading, categorised by how long you keep your positions open:

• The shortest is scalping, where you hold trades for minutes or even seconds at a time. The moment a position turns against you by even a couple of pips, you close it
• In day trading, you aim to close all your positions by the end of the session. That means keeping them open for minutes or hours at a time
• Next up is swing trading, where you hold positions for days or weeks, aiming to capture profits from the smaller trends within wider moves

Finally, position traders keep their trades open for weeks or months at a time, looking to take advantage of major trends

In general, shorter-term styles are more favoured by FX traders, but all are valid if you have the right conditions. You might want to try a few out and see what fits your plan best.

Keep Charts Clean

Once a forex trader opens an account, it may be tempting to take advantage of all the technical analysis tools offered by the trading platform. While many of these indicators are well-suited to the forex markets, it is important to remember to keep analysis techniques to a minimum in order for them to be effective. Using multiples of the same types of indicators, such as two volatility indicators or two oscillators, for example, can become redundant and can even give opposing signals. This should be avoided.

Any analysis technique that is not regularly used to enhance trading performance should be removed from the chart. In addition to the tools that are applied to the chart, pay attention to the overall look of the workspace. The chosen colors, fonts, and types of price bars (line, candle bar, range bar, etc.) should create an easy-to-read-and-interpret chart, allowing the trader to respond more effectively to changing market conditions.

Determine Entry and Exit Points

Many traders get confused by conflicting information that occurs when looking at charts in different timeframes. What shows up as a buying opportunity on a weekly chart could show up as a sell signal on an intraday chart.

Therefore, if you are taking your basic trading direction from a weekly chart and using a daily chart to time entry, be sure to synchronize the two. In other words, if the weekly chart is giving you a buy signal, wait until the daily chart also confirms a buy signal. Keep your timing in sync.

A Consistent Methodology

Before you enter any market as a trader, you need to know how you will make decisions to execute your trades. You must understand what information you will need to make the appropriate decision on entering or exiting a trade. Some traders choose to monitor the economy’s underlying fundamentals and charts to determine the best time to execute the trade. Others use only technical analysis.

• Fundamental analysis involves looking at the economic factors surrounding a currency, such as central bank statements, money flow and inflation
• Technical analysis involves looking at an FX pair’s price chart, using indicators and patterns to determine where it is headed next

Your choice between the two will dictate how you navigate the markets, and which opportunities you’ll trade. You don’t have to stick to one of the other, though – many successful traders build an approach that works in both methodologies.

If you’re primarily a technical trader, for example, then you risk being blindsided by market volatility if you ignore the news surrounding a currency. By incorporating fundamental analysis into your strategy too, you can lower your overall risk.

Whichever methodology you choose, be consistent and be sure your methodology is adaptive. Your system should keep up with the changing dynamics of a market.

Pick your pairs before you start

With a plan in place, a style in mind and some practice under your belt, you can begin thinking about placing your first live trades. With dozens of FX pairs to choose from, though, deciding where to start can be tricky.

Often, it’s a good idea to choose one or two pairs to begin with, so you can maintain focus. When choosing your pairs, here are a few points to consider:

• Liquidity. Highly liquid pairs are usually better to trade, as they’ll have lower costs and smoother price moves. The major pairs like EUR/USD, GBP/USD and USD/JPY tend to be the most liquid
• Timings. Forex is a 24-hour market, but liquidity for individual currencies will rise and fall throughout the day as different sessions open and close. So, choose a market that fits your FX trading hours
• Familiarity. Try to choose currency pairs that you already know and understand, as there are lots of factors that will move each market

Start Small When Trading Live

Once a trader has done their homework, spent time with a practice account, and has a trading plan in place, it may be time to go live, that is, start trading with real money at stake. No amount of practice trading can exactly simulate real trading. As such, it is vital to start small when going live.

Factors like emotions and slippage (the difference between the expected price of a trade and the price at which the trade is actually executed) cannot be fully understood and accounted for until trading live. Additionally, a trading plan that performed like a champ in backtesting results or practice trading could, in reality, fail miserably when applied to a live market. By starting small, a trader can evaluate their trading plan and emotions, and gain more practice in executing precise order entries—without risking the entire trading account in the process.

Manage your capital

Another key factor in controlling risk is to manage the money you’re allocating to any given position. Many successful traders stick to the 1% rule, which involves only ever risking 1% of your total funds on any given trade. If, for example, you have £5,000 in your account, your total risk on any position would be £50.

It’s also worth evaluating your risk-reward ratio, which dictates how much potential profit you want to target compared to your total risk. The higher your ratio, the fewer successful trades you’ll need to be profitable. However, you’ll also find fewer opportunities, so finding a good balance is key.

Many traders use a risk-reward ratio of between 1-2 and 1-3.

Always use a stop-loss order

Risk management might be the most important factor in dictating your long-term forex trading success – and the basic building block of any risk management strategy is the stop-loss order.

Stop losses are instructions to your trading provider to close your open position if it moves a certain number of points against you. They are useful for ensuring that your positions don’t incur running losses. You can even use more sophisticated types of stop, such as:

• Guaranteed stops, which can’t be affected by slippage (when a market gaps over your chosen stop level, meaning it executes at a worse price)
• Trailing stops, which follow your position if it earns a profit, then lock in if it turns against you

Limits (also known as take profits) are also a useful tool, automatically closing your trades when they hit your profit target.

“Don’t look too hard for your trades, wait for the good ones to come to you”

Limit exposure

Limiting exposure simply means limit the percentage of your capital that is exposed both to one sector and to the market as a whole at any one time. This will usually mean limiting your exposure to approximately 5% of capital. The theory behind this is that, should the market go against you in all your positions on the same day, you will still be able to trade in the same manner as before.

Never average down

Every trade should have a well thought out structure in regards to entry and exit. A trader should never average down. Averaging down is a method used to try and double up on a losing position in an effort to lower the average entry price obtained during a losing move.

This is not the same as averaging in, which involves entering the market slightly early with half of the position size in order to take ensure that ,should the market bounce prematurely, the trading opportunity is not lost.

Let profits run and cut losses short Stop losses should never be moved away from the market. Be disciplined with yourself, when your stop loss level is touched, get out. If a trade is proving profitable, don’t be afraid to track the market. Theoretically a trade should never be simply closed out manually; it should always be closed out by a stop loss. This allows the trader to lock in profit but never prevent further profit from being made.

“Every loss is a learning opportunity, take time out to take advantage of it.”

Use Reasonable Leverage

Forex trading is unique in the amount of leverage that is afforded to its participants. One reason forex appeals to active traders is the opportunity to make potentially large profits with a very small investment—sometimes as little as $50. Properly used, leverage does provide the potential for growth. But leverage can just as easily amplify losses.

A trader can control the amount of leverage used by basing position size on the account balance. For example, if a trader has $10,000 in a forex account, a $100,000 position (one standard lot) would utilize 10:1 leverage. While the trader could open a much larger position if they were to maximize leverage, a smaller position will limit risk.

Get Used to Being Wrong 

Even the most successful traders make mistakes and lose money occasionally so, as a beginner trader, you need to accept that you are going to be wrong from time to time, particularly at the beginning. 

Being wrong and making mistakes are unavoidable consequences of learning to trade, and the sooner you accept this the better. If your last trade was a loss, try not to obsess over it and don’t let it impair your decision making process on the next trade. Instead, analyse your mistake and try to learn from it. 

So, how best to learn from your mistakes when trading? That’s where the next of our Forex trading tips comes in. 

Keep Good Records

A trading journal is an effective way to learn from both losses and successes in forex trading. Keeping a record of trading activity containing dates, instruments, profits, losses, and, perhaps most important, the trader’s own performance and emotions can be incredibly beneficial to growing as a successful trader. When periodically reviewed, a trading journal provides important feedback that makes learning possible. Einstein once said that “insanity is doing the same thing over and over and expecting different results.” Without a trading journal and good record keeping, traders are likely to continue making the same mistakes, minimizing their chances of becoming profitable and successful traders.

Never trade scared

Trading scared or undercapitalised is one of the leading causes of unnecessary losses. Emotions such as greed and fear often cause errors in judgement and are always present however they are heightened when trading under pressure.

Don’t be afraid to go home

No trader should ever be hesitant to stop trading and if necessary walk away for the day. A morning losing streak is more often than not compounded by the trader that continues to trade. By walking away, you are not being lazy, but being mindful of the fact that something is wrong that day and that you are not in tune with the markets. Walking away is nothing to be ashamed of. Come back fresh the next day.

Don’t trade blindly from other’s trading ideas

Traders new to the markets frequently place trades based on others recommendations. Any trading activity should always be researched in depth. Not doing so will prevent the trader from being able to react to any changes in the market during the life of a trade. Remember positive information being released about the market can still have a detrimental effect on price and anything that you read in the papers is old news, as professional traders will have heard about it and reacted accordingly the previous day.

Treat Trading as a Business

It is essential to treat forex trading as a business and to remember that individual wins and losses don’t matter in the short run. It is how the trading business performs over time that is important. As such, traders should try to avoid becoming overly emotional about either wins or losses, and treat each as just another day at the office.

As with any business, forex trading incurs expenses, losses, taxes, risk, and uncertainty. Also, just as small businesses rarely become successful overnight, neither do most forex traders. Planning, setting realistic goals, staying organized, and learning from both successes and failures will help ensure a long, successful career as a forex trader.

Be Patient 

Finally, our last Forex trading tip is to be patient, because there is no list of forex trading tips or secrets that will ensure quick success. 

Many people new to trading have an unrealistic vision of becoming rich in a matter of days. The reality is that the journey to becoming a successful Forex trader requires, not just lots of effort, but also lots of time. You are not going to become a successful trader in a couple of weeks. 

So, be patient and don’t try to rush the process; instead, take your time and enjoy the journey. 

The Bottom Line

The worldwide forex market is attractive to many traders because of the low account requirements, round-the-clock trading, and access to high amounts of leverage. When approached as a business, forex trading can be profitable and rewarding, but reaching a level of success is extremely challenging and can take a long time. Traders can improve their odds by taking steps to avoid losses: doing research, not over-leveraging positions, using sound money management techniques, and approaching forex trading as a business.