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Forex Trading

Forex Trading Strategies for Beginners

Forex Trading

For 17 years in the world of investment and finance, I am also one of those people who are trying to find a foreign exchange (forex) trading strategy to "never lose". It can be said that until this moment, I did not find the strategy. Because, even if I find the strategy, Warren Buffett, Jeff Bezos, and Elon Musk may no longer survive as the ranks of the richest people in the world. 

First of all, take some time to fix your way of thinking before focusing on finding the best strategy. If you have followed the previous series of articles, I am not giving a strategy, but sharing knowledge about how the forex market works and its basic philosophy.

You know, strategies are easy to make when your thinking is right. A simple example, if someone says that in this era there are no good business opportunities, do you think that person will find opportunities?

Of course the answer is no because his initial belief was like that. Likewise, the perception of many people who think that the forex market is bad. Will they see an opportunity and take advantage of this market?

Certainly not either. When trading forex, you need to be prepared for losses. However, it is not wrong if you consider whether it is possible. When I was little, my dad used to get annoyed. Every time I make a mistake, I always say that mistakes are learning.

At that time, papa said that I was selfish by not admitting a mistake. I'm not going to argue about that, but take a few simple principles as follows.

  • The important thing is not to repeat a mistake.
  • On another occasion, I will try again in a different way.
  • I'm sure there will be a way that will eventually work.

At least, those three principles are what I do over and over again. Everyone is free to give a meaning to each event, right? I can summarize the mistakes made when someone is trading or entering the forex world into a few main points.

They don't understand how the market works, let alone calculate it.

They are looking for a strategy that is always profitable.

They always think about success and deny failure.

I have already discussed these two points, so here is an explanation of the third point. The scenario in forex trading on every buy or sell option must be accompanied by two steps.

First, determine the buy or sell price, determine the profit target price, and determine the loss target price. Then, the second is to make sure the profit and loss targets are achieved.

Back again with the example of the XAU/USD world gold price. With all the analysis done, you choose to buy when the price is 1,800 US dollars per troy ounce. This is a good first step.

Then, for what price increase you have to sell the gold? The next question, at what price do you have to admit that your analysis is wrong? If you can state the target for these three things, the first condition is fulfilled.

Safe! I let you choose the strategy in this article. Then, what does the statement "make sure the profit and loss targets are achieved"? Is it possible, the profit target is not achieved?

Obviously, it may not be achieved because the movement of world gold prices is not ours to regulate. Therefore, any plan may not happen or miss, right?

Then, if the target loss? This is what's interesting. In this section, there are two influencing factors. First, the issue of rising and falling world gold prices is again not ours to control, but depends on the following questions. Did your target loss occur or did you go bankrupt before your target was reached?

So, what is the meaning of this question? You buy XAU/USD at a price of 1,800 US dollars per troy ounce. Then, you plan to stop losses at a price of 1,790 US dollars per troy ounce. You buy 1 lot of XAU/USD, your balance before starting trading is 2,500 US dollars. As for the personal capital paid in 1:100.

You can learn about this capital and comparison from the previous article entitled "Forex Trading, Any Capital Can Be Out".

Unfortunately, if the market price per troy ounce drops 7 US dollars—from the initial price, which is 1,800 US dollars—you have been declared bankrupt by the broker. In fact, earlier you had a target to stop losses when the price fell to 1,790 US dollars, right?

So, that is the case when your target loss is not calculated with the initial capital. Please remember that forex trading is not the same as stock trading. In stocks, when you buy 1 lot of shares for Rp. 100,000 with a capital of Rp. 500,000, the rise and fall of the share price does not affect the remaining Rp. 400,000 capital you have.

Meanwhile, one opening forex trade will affect your remaining capital in the balance. So, you are never wrong if the profit or loss target is hit on every forex trading position made. Because, you have planned profit and loss at the beginning.

Whatever happened, you predicted it. However, if you plan to lose, but it hasn't happened while you were already broke, it is a condition called misunderstanding the market, finance, and strategy in forex.

Note: Trading CFDs with leverage may bring high profits, but it can also cause you to lose funds. Please consider the risks before investing.

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