Posted by forex at 6:30 AM
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1. Learn about the spreads charged by your Forex company. A spread is the difference in price between the pair of currencies that you are trading, payable to the Forex company upon the execution of the trade. The spread is always paid first, before your profits. Spreads can vary widely, and depending on your trading style, can make a significant difference in your bottom line. Compare spreads to find the best company to suit your needs.
2. Create a clear exit strategy to ensure that your gains are maximized and your losses are minimized. Losses are guaranteed with all Forex accounts. Setting up an automatic sale threshold, known as a stop loss, when you make your initial trade is a good way to ensure that your losses are kept to a minimum.
3. Monitor the news for events that may affect your positions, because Forex trends are a direct reflection of the economy. Quick reactions to economic events can help you maximize profits or minimize losses.
4. Check your account often; the Forex market is volatile. Frequent monitoring can alert you to changes and trends early so that you can revise your strategy as needed. Plenty of applications are available for mobile phones to help keep you connected to your account.
5. Pay careful attention to your account balance to avoid unexpected margin calls. Part of the great profit potential of Forex lies in the large amount of margin that Forex trading allows. A margin call is when the Forex company sells your currency pair without your permission, in an attempt to reduce the amount of loss that a trader sustains. Margin calls are frustrating, so watch carefully to ensure that one is not on the horizon.
6. Audit yourself on a regular basis to verify your profits and losses. Forex can mask profits and losses in the currency rates, so taking the time to audit your account will ensure that your goals remain consistent with your investment strategy.