Growth in the popularity of investing in the international currency market is accounted for several reasons, the main of which is high profit. Interest rates at Forex are often higher than in the banks or other financial institutes.
However, in order to achieve success at Forex and learn to earn stable income at Forex an investor must use all his/her wits and knowledge of trading at Forex.
There are certain rules which help to deal with competitors and avoid mistakes, which are typical for the beginners.
Rule N1 - make and strictly follow investment plan
Major and the most common mistake, which beginners often make is an emotional and impulsive action. Some of the beginners do not even think about of the investment plan trying to gain profit as soon as possible.
Cold-blooded premeditation and strict adherence to the plan is the key to success and high profits. It is also necessary to diversify risks of the investment portfolio.
Such strategy will help to earn income and reduce risks.
Rule N2 - do not use all your funds for making investments
Every type of investing bears some risks. However, it is not a reason to refuse from this method of earning money.
You just need to remember about the risks and do not use all your funds for making investments!
A driver has a safety bag to ensure security, an investor’s safety bag is a rule not to invest all the funds, just hold some money on your account and do not use it.
Rule N3 - constantly build-up your capital
In order to build up your capital an investor shall constantly increase investment funds. Even in case of the low interest rate, making large investments you will earn good money. Note that making small investments it is difficult for an investor to reach breakeven level and increase the volume of funds. We suggest to the beginners to split funds into two parts. The first one can be used for your needs, while the second one can be used for investing and earning profit. Gradually you will reach stability and independence.
Rule N4 – never succumb to the moment
If an investor does not adhere to the selected strategy, he becomes a gambler, who succumbs to the moments of the variable market. You mustn’t change the rules and succumb to the moment expecting quick profit. Instead of gaining profit you will face problems and will have to adjust your plans quickly. It is important to keep cool even if you begin to receive profit from trading an instrument. Control your desire to invest all your funds into one instrument, just remember that risks are still there.
Rule N5 – learn to take a correct assessment of risks and profits
An experienced investor knows how to assess potential profits and losses. Based on the available information, the experienced investor builds up an investment strategy to ensure that in the case of losses he/she will be able to cope with a problem and remain “afloat”.
… and finally, some more advise to a beginner
Remember that investing in the international Forex currency market is a type of business, which involves certain risks and at the same time a chance of earning high profits. Basic rules described in this article will help you avoid typical mistakes of the beginners at Forex.
- We recommend you to use only your own funds for making investments, never use the money, which you borrowed from your friends or relatives. Do not take additional burden and risks and do not make your life difficult. Just make small investments and build up your own capital slowly and steadily.
- Analytical reviews are usually very helpful but they cannot be always 100% correct and always accurately predict price behavour.
- Try to discuss your trading strategy with an experienced trader (especially in Social Trading) and clarify all the details. Try to use automated methods of trading. It will save you time and help to avoid mistakes.
Follow these simple rules and you will be able to build up your capital.
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The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.