Forex trading is becoming increasingly popular in Germany, but too many newcomers are striving for quick money. This greed is ultimately the reason why over 90% (!!!) of the Forex are unsuccessful and run into the margin call or lose your entire wealth. In this blog post I would like to present 5 golden rules with which you can significantly reduce your Forex losses and ultimately increase your profits.
Rule 1 – Create a demo account for paper trading: Newcomers are strongly advised to create a so-called demo account with real money before Forex live trading. With this account you can trade play money on the Forex exchange and test your strategies to see if they last. You can create demo accounts with most major brokers (usually for a test period of 30 days). Only when you have made a profit with your demo account after one month can you start with Forex Live Trading.
Rule 2 – Do not open too many Forex positions at once: Many newcomers usually make the mistake of opening too many positions at once and thus lose track! No more than 3-5 Forex positions should be opened at once. It is also advisable for beginners to initially only focus on 1-2 currency pairs.
Rule 3 – Set Stop Loss in Forex Trading: The Most Important Forex Rule Ever! With a stop loss you reduce your loss drastically. It is best to analyze your trading target and the loss that you have been willing to accept with this position BEFORE entering a foreign exchange position. After executing the buys, it is best to set a stop loss immediately. For example, you set your take profit at +18 pips and your stop loss at -30 pips for the respective course.
Rule 4 – Pay attention to money management: An extremely important starting point for permanent Forex profits is good money management. Many traders simply place wrong bets on their respective forex trades. Therefore NEVER risk more than 2% per trade of your total capital! Example of good Forex Money Management, with which I trade successfully: If the price has reached your target after you opened your Forex position, 80% of the position closes and the other 20% you leave with a new stop-loss adjustment (+1 break even ) just keep running. I had already seen many situations where I made more profit with the 20% of my position than with the 80%.
Rule 5 – Lower spread costs: It is also very important to reduce spread costs, because the Forex profits start with the fees! Find out more about the respective broker that is of interest to you, e.g. in other specialist forums or broker comparison sites. There are already very reputable and good brokers who, for example, already offer spread costs for the EUR / USD under 1 pip. Many brokers pay 2 pips spread for the EUR / USD. This means that in this example you can save a whopping 500 euros with just 500 Forex trades.
I hope that one or the other of these Forex rules for trading has helped. Does anyone have any other Forex rules or tips? Just write in the comments in below comment box.