Classic Forex Trading Knowledge

Although personal investment strategies in the Forex market are different, they have the same knowledge base. Today I will share with you classic Forex trading knowledge.

Classic Forex trading knowledge

(1) Forex speculation should be invested with spare funds

If an investor invests with the necessary expenses for family life, if a loss occurs, it will directly affect the family's livelihood, and the chance of failure in the investment market will increase. Because when you use money that should not be invested to make money, you are already at a psychological disadvantage, so it is difficult to maintain an objective and calm attitude when making decisions.

(2) When speculating in Forex, you should know yourself and the enemy

You need to understand your own personality. Those who are impulsive or have serious emotional tendencies are not suitable for this market. Most successful investors can control their emotions and have strict discipline to effectively restrain themselves.

(3) Do not trade excessively when speculating in Forex

To become a successful investor, one of the principles is to maintain more than 3 times the capital at any time to cope with price fluctuations. If you do not have sufficient funds, you should reduce the number of trading contracts you hold. Otherwise, you may be forced to "cut your position" due to insufficient funds to free up funds. Even if your vision is proven to be correct later, it will not help.

(4) Face the market squarely and abandon illusions

Don't be emotional and look forward to the future or remember the past too much. An American futures trader said: A hopeful person is a beautiful and happy person, but he is not suitable to be an investor. A successful investor can separate his emotions and transactions.

(5) Don’t change your mind rashly when speculating in Forex

Set the price and plan for entering the market in advance, and do not change your decision easily due to the current price fluctuations. It is very dangerous to make temporary decisions based on the day's price changes and market news.

(6) Make appropriate suspension of trading

Trading day after day will gradually dull your judgment. A successful investor said: Whenever I feel that my mental state and judgment efficiency are as low as 90%, I start to make no money, and when my state is lower than 90%, I start to lose money, so I will drop everything and go on vacation for a few weeks. A short break can help you re-understand the market and yourself, and can help you see the direction of future investment. Investor motto: When you get too close to the forest, you can't even see the trees in front of you.

(7) Do not speculate blindly in Forex

Successful investors do not blindly follow what others say. When everyone thinks they should buy, they will wait for an opportunity to sell. When everyone is in the same investment position, especially when small investors follow suit, successful investors will feel danger and change course. This is the same as the contrarian theory. When most people say they want to buy, you should wait for an opportunity to sell.

(8)Reject other people’s opinions

When you have grasped the direction of the market and made a basic decision, do not change your decision easily due to the influence of others. Sometimes other people's opinions may seem reasonable, prompting you to change your mind, only to find out afterwards that your own decision was the most correct. In short, other people's opinions are only for reference, and your own opinions are the decision for buying and selling.

(9) When you are not sure, wait and see.

It is not necessary to enter the market every day. New entrants are often keen on entering the market, but successful investors will wait for opportunities. When they feel confused after entering the market, they will leave the market first.

(10) When speculating in Forex, you should act decisively

When investing in the Forex market, there are many psychological factors that lead to failure. A very common situation is that when investors face losses and know that they can no longer feel lucky, they often hesitate and fail to make a decisive decision, so they sink deeper and deeper and their losses increase.

(11) Forget past price levels

"Past price levels" is also a pretty tough psychological hurdle to overcome. Many investors make wrong investment judgments due to the influence of past prices. Generally speaking, after seeing high prices, when the market falls back, you will feel quite unaccustomed to the new low prices. Even though various analyzes show that the market will fall again and the market investment climate is very bad, investors will not sell their holdings before these new low prices. They will also feel that it is "low" and have the urge to buy. As a result, they will be firmly trapped after buying. Therefore, investors should "forget past price levels."

(12) Patience is also an investment

There is a saying in the investment market that "Patience is an investment." I believe few investors can do this. People engaged in investment work must develop good patience, which is often a key to success or failure. For many investors, it is not that their analytical skills are low or that they lack investment experience, but that they lack endurance and buy or sell too early, thus incurring unnecessary losses.

(13) Stop loss position should be set when speculating in Forex

This is an important investment skill. Since the investment market risks are quite high, in order to avoid losses in case of investment mistakes, we should place a stop-loss order every time we enter the market. That is, when the exchange rate falls to a certain predetermined price, or even falls, the transaction will be settled immediately. Therefore, this kind of order is a loss-limiting order, so that we can limit the further expansion of losses.