What to do before opening a trade

Trading in the Forex is and simple can be done in a matter of seconds. Trading successfully and earning profits though, requires a bit more preparation.

 

Before you open up a trade there are a number of factors and variables that you should at least be aware of. These influences may be external, such as market conditions, or internal, when your strategy is involved, and both kinds should be taken into consideration if you don’t want to rely on luck to be successful.

 

First thing you’ll want to do is conduct some level of analysis to pick which currency to trade. Depending on your style, you can base this on charts by identifying support and resistance levels, moving averages, or any other of the dozens of technical indicators available.  You can also open positions based on the news such as reports from central banks or updated statistics on a currency’ economy. This is an integral step since all your trading decisions should be based on reliable data instead of being based on your whims.

 

Next up is don’t forget to review your exit strategy. Ask yourself questions like, how much money are you willing to lose before accepting defeat and closing it? Conversely, you should also take note of at what level you plan to cash in any profits achieved. This will test your discipline and allow you to be in control of the situation instead of being be subject to impulsiveness.

 

Finally, it would be a good idea to write all of the trade details down. By keeping a log of the trades you’ve opened, why you did it, the kind of analysis that you used, and the end result, you can start building up invaluable lessons which you wouldn’t find in tutorials or articles. It is important that you become aware of your own tendencies and find out where your weaknesses are in order for you to improve as a Forex trader.