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First-year Traders Checklist: Start Trading Strong
If you’re trading with a high level of competency, you might already know some of the information you are about to read. If you’re still in your first year, then this article could be exactly what you need to take your trading performance to the next level. Read on to get some great pro tips, including:
- Why you should create multiple accounts on your Exness dashboard
- Why leverage is so important
- What kind of profit goals you should be considering
Just like joining the driving community, there’s a lot to learn before you can safely go it alone. Stay with FX News and get top tips and pro strategies every day.
Why have more than one trading account?
Having more than one account on your Exness dashboard is a smart move if you are planning to diversify your trades. This means having smaller multiple trades instead of putting all your eggs in one basket. So what’s the advantage of multiple accounts? It all comes down to leverage. Currency pairs with low trading volumes have high volatility—in other words, wild price swings. Since leverage multiplies your trading position, a big swing can create huge profits in minutes, but it can also wipe out your entire budget if you’re not paying attention. Stop Loss and Take Profit help to protect your funds, but also limit your trading activities.
For example, let’s say you set a Stop Loss on a Buy order. The price moves down rapidly, then a rally (long rise) begins. Choosing to Buy and not Sell was the right choice, but your order will close in a negative because of the flash-crash that preceded the rise. Lower leverage means your account can survive these brief and extreme movements and go on to reap the rewards that come from choosing the right direction.
Consider setting up a low-leverage account for volatile instruments such as GBP, oil, and ZAR. For major currencies such as EURUSD, a higher leverage setting might be necessary for more worthwhile profits as the volumes are higher and the price moves are less extreme.
Technical analysis
Newbie traders often find chart analysis and price history to be more interesting than politics. With the help of certain technical indicators and Expert Advisors, a trader can find some amazing trading opportunities. Indicators such as the Relative Strength Index (RSI) measure the volume and speed of price moves and produce a score between 0 and 100. RSI users typically consider above 70 as overbought, and under 30 as oversold. Overbought and oversold levels suggest an imminent price reversal, but they are not foolproof, and there are certain circumstances that can render indicators inaccurate.
Get to know the most popular indicators and make your own chart analysis using the Exness demo account to see if you have a good technical eye. If price moves are not following the indicator forecasts, there’s a good chance an economic release threw a spanner in the works and disturbed the price trend.
Economic releases
Since a nation’s currency is directly tied to its economy, any official news release that measures economic status can affect the currency prices rather dramatically. If the Federal Reserve System (Fed) releases favorable USD news or forecasts, a trading instrument tends to react favorably.
The biggest releases are:
- CPI (Consumer Price Index)
- FOMC (Federal Open Market Committee)
- GDP (Gross Domestic Product)
- NFP (Nonfarm Payrolls)
- Retail Sales Report
If your technical analysis indicates a good trade, be sure to check the economic calendar to see if there is a coming economic release. If there is, make sure the forecast supports and not contradicts your Buy or Sell position.
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Setting achievable profit levels
So you’ve found a currency pair worth trading and technical analysis and economic news are both in harmony with your forecast. To play it safe, you might want to set Take Profit and Stop Loss. When choosing the levels, keep in mind how long you are planning to keep the order open.
If you’re planning a day trade, check the range for the last 24 hours. The past highs and lows can help you set realistic stopping points. If you are thinking the price move will trend for a longer period, then review the high/low range for the period you are planning. You can, of course, extend the range if your analysis indicates a coming long term trend.
Never chase losses
You can’t win them all. The goal is to have more good days than bad. Your past results should not determine your next trade. It’s so tempting to up your trading budget to chase losses, but this is a very bad idea. Stay true to your money management system, keep cool, and roll with the blows.
Trading can become a lifelong pursuit. It offers rewarding challenges and potential returns, but only if you take it one day at a time and expand your knowledge as you go.
Set up a trading account and start your trading journey the right way
Not sure how to get started? No problem. Follow this step-by-step guide.
