5 Interesting Forex Trading Facts Explained

Each and every single trade you make connects and involves quite a number of things. Knowing what exactly happens behind the scenes, what makes the market act the way it does and how everything is interconnected is beneficial to any kind of a trader.

How much to Risk?

First of all, you have to figure out how much of the deposited account balance you are willing to risk for each trade. You have to pay attention to the following factors:

Focus on the money management, and by that I mean focus on managing your losses. Successful traders do not win every trade since it is statistically impossible. Your winning percentage is between 50%-70%, meaning that you will have a lost trade up to 50% of the time.

If you want to be successful, avoid risking more than 2% of your account funds on any one trade.

Do not use leverage higher than 1:200 because that is a suicide mission.

What to Expect?

There is no Focus-Pocus. You will have to work hard to make a decent profit and it may take at least half a year.

Do not expect to make tones of profits with a deposit of $100. Treat mini/micro accounts as a transition state from demo trading to real live trading.

Never trade money you cannot lose. In fact, I suggest having at least $2,000 available. This money should not make you twitch and fall into coma in case all of it is lost. Treat the money you will lose in the beginning as a learning fee. Practice makes perfect –remember that!

How much to Learn?

If you are a complete newbie, do not open a live account until you learn the basics and practice with the demo account. Trading education may take up to 6 months, depending on how serious you are and how much time you invest in learning.

Technical analysis should be your best friend. Study everything there is to it and you will understand the market better. If you choose to trade news, be aware that most traders choose not to (after rather nasty experiences!)

Is Forex Easy?

If you expect to find a golden fish to make your 3 wishes come true, you are barking at the wrong tree. Forex trading is difficult. Period. It was never easy. It didn’t get any easier today. It is not going to be easy in the near future.

If you feel like being seduced by automated software or magic strategies from so-called gurus for just $199, which promise to solve all your problems (including mortgage on the house and college tuition) and make you millions in weeks without any knowledge of trading – RUN away from the computer and don’t come back until you take a cold shower and realize that there is no easy money, especially not in forex.

Which Currency to Trade?

Most frequently traded currencies are U.S. Dollar (USD), the Euro (EUR), the Australian Dollar (AUD), the Japanese Yen (JPY), the Canadian Dollar (CAD), the British Pound (GPB), and the Swiss Franc (CHF). 90% of all transactions in forex market involve US Dollar.

Despite the fact that the whole world is connected in forex trading, the main trading centers are
New York, London, Sydney, Tokyo, and Frankfurt; while the countries whose economic news you should follow closely are the United Kingdom, the United States, and Japan.