The biggest mistake that any forex trader could make is to jump straight into forex live trading. There are a number of steps that you have to complete before you trade forex live. If you do not complete these steps then you will seriously limit the success you will have on the market. All of these steps work toward preparing you for the forex live market. Trading on the live market before you complete these steps will lead to losses.
Test Your Forex Live Trading Plan
When you do anything with your money you should have a plan and forex live trading is no different. The plan needs to cover a number of areas of your trading. It is also very important that you stick to the plan you have. If you feel that your plan no longer works you should stop trading live and move back to the plan development phase. There are some things that you plan should tell you:
- The trading strategy you are using – it is important that your plan covers the strategy in detail. This allows you to have a written and solid base for the strategy that you can refer to if you ever have any problems.
- Your entry and exit points – the plan needs to include when you enter the trades and when you close the trades. This ensures that you do not give way to any emotional trading. If the plan saying not to do something then you should not do it.
- Your risk management – your plan should have the steps you are taking to limit your risk when trading. If you do not detail these then you may forget them and open yourself to further risks.
Your Trading Account Capital
To trade forex live you have to deposit a certain amount of money into your trading account. The amount you deposit will vary depending on the minimum required by your broker to what you have to use. It should be noted that you must not trade with money that you cannot stand to lose. If you do then you will open yourself to emotional trades. It is also recommended that you deposit more than the minimum amount of you can. This gives you more to work with and increases your potential profits.
Using A Demo Account First
Before you start to trade forex live you have to practice. The statement that practice makes perfect is very real when it comes to forex. If you do not practice what you are going to do first you will not know if it is going to work or not. Practicing on a demo account allows you to test your plan and strategies in real world conditions without the risk of losing your own money. The money you stand to lose on the demo account is virtual and not real. Practice will also prepare you for the stresses of trading live. It is important that you trade on your demo account like you would live. This is the only way that you will get yourself ready for the live market.
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