Currency trading, or binary trading as it is also known, is an exciting way to invest money. It is very down-to-earth and accessible, but it is also a challenge for both new and veteran investors. It takes as little as a few hundred dollars to start, and can be very enticing.
It is easy to get lured into investing schemes. The number one rule is this. If the scammer is a legitimate trader with such a great billion-dollar trading platform or strategy then why are they spending any time selling classes? The answer is simple: they are scam artists. Save your money for investing wisely in binary trading.
The greatest challenge is understanding such a huge market. It is potentially profitable. Though, probably the most difficult market to master because it involves currencies of many worldwide nations. The complexity lies in the intricacies of the individual nation’s politics, economics, and natural resources. Much can happen that can impact currency. It’s what makes it both volatile but a welcome challenge for most currency traders.
Stick To The Plan
Before you dip your feet in the trading waters, be sure you understand enough to make a trading plan. The next step is to stick to the plan. Trust us. Your emotional heart strings will get pulled at one way or another. Best to stick to the plan, and leave your emotions out of it. It is the quickest way to make some bad decisions. Everyone has done it, regrets it, and hopefully learns to stay neutral.
If you get into the waves, you will see the excitement in the ups and downs of Binary trading. This is where the emotions get pushed into action. We cannot emphasize it enough: stick to the plan, and leave your emotions for soap operas and professional football or hockey.
The two major emotions that rear their head are fear and greed. Some people will feel a nostalgia too. For instance, great grandpa is from India, so you feel bad selling off when the country hits a great high or a rough patch.
Avoid Information Overload
It is easy to turn on the television and get engrossed in the stock and commodities crawls, getting your next fix when they talk about currencies. Geopolitics follows, along with interviews with the biggest traders in currency. It is nearly impossible to pull yourself away. Before you know it you are making your own charts, gathering your own information, and comparing notes with other traders on currency trading forums.
While it is great to get a feel for the process, it is best practiced. Currency trading is not just a theory, it is always in action. Start out by being disciplined. Devote a couple hours to research, at which time an alarm goes off. Stop researching. Give a couple hours effort to determining what you learned goes with your trading plan. Execute trades for a couple hours.
The market will be there again tomorrow. There is never urgency. It is going to go up and down, and sometimes you will lose money, and sometimes you will gain money.
Best Advice Ever!
Start off small to avoid overexposure to the markets. This will make it easier to take losses less personally. It will also allow you to enjoy gains too.
Never start with large amounts of money in the currency markets. Give yourself a year working with that first few hundred dollars. Maybe inject $25 per month to the trading allotment, but do not do much more than that. It is easy to take a bath because you get over-excited that first year.
Keep good records and use a program that will alert you to the good, bad, and downright ugly trades that you have made for an entire year. This way you can evaluate what works for you and what does not. Learn from it and let it inform your future trading plans.
Never Put Good After Bad Money
If you make a losing trade, do not add more money to the losses. Emotionally speaking, you might get greedy. You might think that you could gain even more money when it turns into positive ground. The reality is that you are more likely to continue along with a downslide in the market, and lose more money.
Here’s a better way to handle this situation. Put an alert on the currency. Put a trade in when it starts to show signs of recovering. You will make a gain, but on the upswing, instead of while it’s still losing money. It is a better way to make a financial gain.
Make a simple strategy that is easy to comprehend and to explain. Include measurable goals so that you can trade according to your own long-term plans for success.
Experience is a great way to build success and competence. Put into practice what you learn. Start small. Make trades, continue studying, and learn. In currency trading, those who are the best at it have been at it the longest. The eyes of experience can easily see a sour grape where others would see what would look like a great trade. Their experience tells them it’s not a good bet.
Understand leverage. Lower leverage is better. Understanding this means that you will choose packages that are more appropriate for you.
Remember that guy whose grandfather was from India? If his other grandfather were from Britain, and he only traded rupees, British Pounds, and some US dollars, he would have become too attached to certain currencies. While it is a good idea to start with what you know, it is never a good idea to do so at the expense of following your solid trading strategy and plan.
Always realize the markets are moving constantly. Keep up with the flow and realize it is a lot like a tide — it goes in and comes back. It goes up and comes back down. Always be prepared to make trades — day or night. The world is always moving, and you need to be prepared to keep up with it.
Some Binary investors trade only on weekends or limit themselves to just a few days a week. It might be a good way to start, but it can definitely hinder profits limiting your trading hours.
If you are concerned about overdoing it, consider checking in daily. If there are any news items worth following about your currencies, or opportunities, keep an eye on them. Get involved and make a trade if it makes sense. But see the difference between checking in daily and limiting the number of hours you spend on trading daily versus limiting the days of the week you trade.
Probably the most intimidating part of trading is understanding economic indicators and how the relate to what will happen to currency. If it helps, make a chart so you know what is likely to happen as a result of more positive employment numbers, or of a receding trading deficit. There is a calendar to the release of economic indicators, so be prepared for newsworthy information and what trades you will make if the information is one way or goes the other.
Find a broker who is helpful, educational, and patient while you learn. Make sure you find a brokerage that encourages day trading, as not all of them have a positive stance on individual investors.
These tips should help you get off on the right foot with currency trading. Learn enough, limit yourself to a few hours per day of specific activities. Limit the amount of information you take in, and instead make trades. Learn from them. Most of all, have a plan and stick to it.