How to Prevent a Trade From Breaking Your Trading Account

Due to the nature of the forex market, it’s easy to make or break your trading account depending on how you trade, and the nature of the trade. And because human beings are sensitive and emotional it’s quite easy at times to practically hand all your money over to the market by overtrading. Here are some ways that you - as a trader- can ensure that you don’t end up breaking your trading account all for one trade.

Know What you’re Looking for in a Market
To make sure that a trade doesn’t end up breaking your account, you need to know the functions of the market well enough to understand and predict its changes. You have to understand yourself enough to know how you want to use the market to your advantage while trading.

Refrain From Trading Emotionally
Once a trader wins a trade and gains profit, his demeanor tends to change, he starts to think that he’s an undefeatable big shot and nothing can ever drag him down well this over confidence is exactly what brings most traders down. Instead of letting feelings of greed and cockiness get the better of you, you need to remain immaculate in your behavior no matter how many losses or profits you might have made previously.

Do not Take too Many Risks
The euphoria of winning a trade often blinds traders and makes them take on opportunities they wouldn’t normally take because of all the risks involved. The more risks you take, the more potential there is for a loss, if you’re uncomfortable with the amount or volume of risks you’re taking its most likely that you’re setting yourself up for a loss.
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Top 7 Rules You Need to Follow as a Trader

Rules are everything, this statement may sound tedious and overused but as a trader, the faster you realize this, the better off you will be. There are always certain guidelines that one must follow to achieve the things he wishes to, following rules will not only be of financial benefit to you but it will also help you attain status amongst other traders and make you seem like someone of principle.

Don’t Put Impulse Over Logical Thinking
Unless you are someone who has been in the market for a long long time and has mastered the art of trading with his gut, make sure you don’t let your impulse take away your profits. Even if you’ve been winning for a long time and think you know your way around the market, you need to understand that one wrong, illogical move can cause you to lose twice as much as you have gained. So listen to your mind and brain rather than what you feel like you should do on impulse.

Don’t Look at Trading Scientifically
As a trader understand that no trade set up is ever 100% correct and you can’t look at it like a lab experiment, trading is an art that takes time to perfect and master, you can just look at all the quantitative data and draw conclusions of your own.

Understand the Pairs
While trading, the trader always buys one currency while shorting the other, always dealing in pairs. To be a successful trader, you need to pair the strong currency with the weak currency as economic trends are always changing.

Never Risk More Than What You Can Afford to
In most cases it’s likely that your common sense works enough to tell you this, but putting too much of your money out on the line rarely ever ends well. You should set a 2% stop loss for every trade and thus ensuring that you limit your losses.

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How to Effectively Use Currency Correlations

A successful forex trader knows his financial limits and understands the sensitivity of his portfolio in the market and the fact that currencies are priced in pairs, and no single pair trades completely free of another. Once - as a forex trader you are conscious of these correlations and how they revolutionize, you can use them to manage your overall portfolio's disclosure quite easily.
What is Correlation?

The reason why a currency’s independence in pairs is easy to see is because, when a trader compares one currency to another, and brings in a third currency, it becomes evident that the currency must be somewhat correlated to one if not both of the other currency pairs. The trader also needs to realize that the interdependence among currencies comes from much more than the simple fact that they are in pairs, where some currency pairs move in a repetitive cycle, other currency pairs may repel, due to external, complex forces.

Changing Correlations
After thoroughly studying and understanding currency correlation tables you will realize that correlations do tend to change and thus, the shifts in the correlations are imperative. The world is constantly changing and the correlations that you see right now will be nowhere in sight in the near distant future, thus it would be best for the trader to look at the six-month trailing rather than just contemporary correlations. A six-month trailing will provide the trader with a clearer perspective on the average six-month relationship between the two currency pairs accurately.

Uses of Correlations
The most important advantage of correlations is that they can help you avoid entering two positions that cancel each other out at once, which might be the same thing as having virtually no position. A trader can use also different point values for his or her advantage while trading.
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The Effect of News on Your Trading Account

Trading has always been an unpredictable market, with all the news and current events taking place, how does a trader manage to make it work? Does he just sit back look at all the charts and plan his moves out or does he simply bet on what’s to happen next?

Price Action
This is where price action comes into play; price action is a reflection of what will happen in the future before it even happens- sort of like a prediction. It sets the trend towards where the market is going and shows you a direction, so while the news comes out on what the people were expecting the price to be, the move based on it has already been made by traders.

The point is that there is no use in waiting for a new event to change the trading because the change is already taking place even before the news comes out through the price action.

Then how Does Following the News Kill Your Trading Account?
You’re probably wondering since the news doesn’t seem to make much of a difference to the traders, how can it make a difference to their trading accounts?

Well, looking at news can make you change your mind even if the price action and technical picture hasn’t changed at all; you are forced into thinking that the market will turn against you just because you read conflicting news.

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5 Important Trading Tips From The Masters of Forex Trading

No matter how much you might have advanced as a trader, at certain points in your career you’re going to wish you had a proper teacher or someone in the forex trading Olympus to help you out when you’re in a sticky position. Well, we’re here to bring you five tips from the experts so you don’t have to beg and suck up to the ‘big’ guys yourself.

1. Don’t Fool Yourself Into Thinking That You Will Trade One Day And Wake up Rich The Next
What most novice traders don’t understand is that you cannot always win, especially not in the first go, the more you start thinking that forex trading is an easy method of earning some quick money, the less likely you are to succeed as you become more prone to overtrading and making false judgments in a haste.

2. There’s More to Forex Trading Than Just the Market
Some complicated market strategies will seem appealing to you but you need to remember that you’re not in it to master the market; you’re trading to let the market master you. You can’t hope to control the market and make it work to your advantage, you need to control and discipline yourself first, good strategies will only take you so far, you need to take charge of yourself and know that half of what you do as a trader depends solely on your character.

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How to Use Herd Instinct in Forex Trading

Herd instinct is as a word an inclination in people or animals to behave or think like the majority of people around them. In trading this means that first observing and then following whatever the entire market as a whole is doing, there are several ways this type of behavior can be explained. One of which is the sociological approach which suggests that the reason behind the existence of herd instinct is social conformity and determinism; individuals feel the need to be accepted by society and think that the only way to be accepted is to mimic all the actions of most of society.

How to Use Herd Instinct in Forex Trading 
Herd instinct can quite easily be used by traders; all they need to do is to base their trade on whatever most of the traders are doing and whatever the market trends are. The trader should see where the market is going and go along with it, blindly following the pattern.

Tips to Using Herd Instinct in Forex Trading 
1. While using a trend, remember to always have a well thought out exit strategy, despite the fact that staying in a herd provides safety in number, it’s often likely to get held back when it’s time to exit the trade as everyone competes with one another to make it out as expertly as possible.

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What is an ECN Market?

The foreign exchange market is one of the biggest trading markets in the world. It is completely unregulated, so there are different market makers that often have a huge impact on the prices. However, if you are a trader in the forex market, there are many things that you should know about this trading platform. Most people often enter the world of foreign exchange trading in the hope of making better trades and maximizing their profit potential. However, since this is a completely unregulated market, most people often end up incurring huge losses before exiting the market.

Here are a few important things you should know about the Electronic Communications Network Market:

Variable Spreads

In a standard forex market, the spreads are generally fixed. The bidding and asking prices are determined by the market makers. However, in an ECN market, the spreads are mostly variable. That’s because the prices are neutral and based on standard market conditions. As a result, variable spreads make it easy for people to make better trades without having to worry about market makers ruining their trading strategy.

Trading is Anonymous

One of the biggest reasons why more and more people are now opting to work with ECN brokers is because they allow you to trade in complete anonymity. ECN markets only work with neutral prices, which means there isn’t a bigger player that can have a huge impact on the market. As a result, the market prices remain neutral and only reflect standard trading conditions. The prices reflect volatility, demand and supply as well as other market conditions.

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The 4 Things That Will Put the Trading Probabilities in Your Favour

Trading can be a difficult business if not dealt with properly, it’s easy to lose your money all in one go and unfortunately for all the math whizzes out there, there is no complicated, quantitative formula that can be used to attain success while trading, to really get a deeper understanding of trading - especially forex trading- you must break down all its key components that are far from quantitative and try to fit and apply them to all the practical situations you face as a trader.

1. Expertise in Trade Entry
It is wise to always have a strategy before entering a trade otherwise you’re likely to get slaughtered. Many forex traders fail simply because they don’t think strategically beforehand, the key to thinking strategically however is to not plan everything to the point.

There is such a thing as too much planning, if you combine two or more strategies and try and cram all that into your brain, you’re likely to fail. Instead, opt to perfect just one strategy so flawlessly that you won’t need to know anything else. It’s good to note your strategic plan down or make bullet points, being prepared is essential and going in, unprepared is forex trading suicide.

2. Qualities of a Good Trader
All the trading you do is dependent on what kind of a person you are; forex trading is a personality quiz of sorts and to be a successful forex trader you need to possess the qualities of an innovative thinker and leader. Discipline is something without which no trader can ever be successful, discipline entails that you can’t be constantly interfering in your trades after you enter them.

- See more at: https://goo.gl/gMhcU2

Top 7 Rules You Need to Follow as a Trader

Rules are everything, this statement may sound tedious and overused but as a trader, the faster you realize this, the better off you will be. There are always certain guidelines that one must follow to achieve the things he wishes to, following rules will not only be of financial benefit to you but it will also help you attain status amongst other traders and make you seem like someone of principle.

Understand the Pairs 
While trading, the trader always buys one currency while shorting the other, always dealing in pairs. To be a successful trader, you need to pair the strong currency with the weak currency as economic trends are always changing.

Never Risk More Than What You Can Afford to
In most cases it’s likely that your common sense works enough to tell you this, but putting too much of your money out on the line rarely ever ends well. You should set a 2% stop loss for every trade and thus ensuring that you limit your losses.

See more at: https://goo.gl/1bLxNv