Why Traders Should Avoid Taking Early Profits in Forex Trading

Beginners make the common mistake of leaning too much towards one of two dangerous market extremities - closing trades too early and holding on to trades even when losing. The former can keep you away from potentially huge profits, while the latter can lead you to incur potentially devastating losses! The blunt truth of Forex exchange is that traders ought to focus more on minimizing losses than on maximizing profits. A few good trades will bring in good money, but one bad trade is more than enough to empty your account completely - that's how volatile Forex trading can get.
 

Forex Traders Should Avoid Taking Early Profits While Trading

 

To elaborate the reason behind Forex traders taking profits too early, each trader is governed by fear, greed and ambition. The need to make money is what drives most, if not all Forex traders. While wanting to make profits is only a natural emotion in Forex exchange, getting consumed by the need to earn is what leads to a swift downfall. Traders fuelled by greed take early profits because of FOMO (fear of missing out)! They tend to follow the misguided belief that if they don't bag profits as they come, they might miss out altogether.
 

The fear of missing out has led several traders to early losses. Traders grow more skeptical by the minute and start housing the fear that letting a trade continues might at some point bring in losses! While taking profits is no crime or a huge mistake, it is when you take that is the deciding factor. Small profits come with a certain level of safety; this tends to comfort most traders as they turn a blind eye to the bigger picture!
 

Big profits are accompanied by bigger risks - that's the nature of Forex trading. This doesn't mean you should completely close out the idea of taking risks at all. Fearing losses is natural, and in fact every trader should have a certain level of fear. However, taking healthy amounts of risk will do you no harm! Even if you are to lose a trade, you will learn from it and this will help significantly down the line. Early profits seem more promising in terms of safety, but the time needed to grow as a trader with these profits is mammoth. 

What you can do instead, is start by incrementing your investments and taking risks gradually. This will slowly eliminate the fear of missing out, and make you a trader that is risk-smart and incredibly adept.
 

Stellar profits await the trader that is willing to make the leap! Sometimes you fall, sometimes you make it to the other side; it is the journey that matters most while Forex trading, not the destination. Join hands with WesternFX today, and learn how to trade from our trading veterans! We will help you grow as a trader at your own pace, and take you to the peaks of success! Call us now to know more.

Strategies that can help traders increase their average returns

Success in Forex trading is a relative term. It does not refer to a few occasional profits, but marginal gains that are consistent over the entire trading career and ensure that the risk-adjusted returns are always sustainable. Using your trading account in the right manner and with astute planning always leads to rewards. 

The key to getting the best returns in any strategy boils down the math. While Forex trading in India, Traders need to identify the best outcomes based on their position sizes and risk-reward ratios before they execute a trade. 

The following strategies are some novel and effective online trading strategies that provide the best average profits and keep the losses low:

1. Winners Bigger than Losers strategy

In this strategy, traders engage with a simple math in mind. They participate in a number of short-term trades where their only aim is to make more number of profits than the number of losses. They usually engage in a random trade with a random price action but ensure that they bring back maximum profits. This is an arithmetically simple and effective trading strategy.

2. Pyramiding Strategy

In this method, traders execute their positions with a snowballing effect on their mind. They improve on a winning position by adding more capital to the position at predefined intervals. This way, an initial risk of 1R can be potentially turned into an nR profit by adding a new position onto the trade as it moves in favor of the trader.

3. The Reverse Martingale

This method is similar to the one previously discussed. However, in this case, the Forex trader will be doubling and compounding the risk per trade across multiple trades. Here, the trader uses profits from one trade and re-invests them in the next trade. This way, the trader only risks 1R but can compound the profits using the market’s money.

Such novel strategies can enhance the trading account and bring profits to the traders at the same time. These strategies work effectively while Forex trading in mature markets like India. Using trading strategies efficiently can help traders double their rewards. Alongside a great strategy, it is vital for traders to have the guidance of experienced players in the field. Allying themselves with a top Forex broker firm like WesternFX can help them improve their profits and keep their losses low.

How to identify a Forex trading scam and stay clear of it?

The world isn’t exactly a fair place; scams happen in one form or another, people get cheated of their hard-earned money, and it’s only those who’re wise that are unaffected by it all. When it comes to Forex trading in India, the scenario is not any different. With daily trading volumes averaging to trillions of dollars with no accountability and no solid regulation, the chances of falling victim to a scam are high – but not to those who’re smart enough to spot it.

How it all started?

With digitalization, currency trading took on an online avatar, where buying and selling were carried out in front of computers. Early Forex trading scams stemmed from manipulation of bid/ask spreads on the computers. Instead of providing the normal spread, the spreads provided differed between brokers. The higher the spread displayed for a currency pair, the more commission brokers make, thus eating into any profits made.

Modern day scams in Forex trading:

#1) The signal seller scam

Signal sellers are usually a retail firm, a managed account company or even an individual trader. These entities promise to trade on behalf of Forex traders and make them wealthy. With fake reviews, testimonials and faulty evidence to prove their competence, most traders end up trusting them and hand over money to invest in the Forex exchange, only to find them disappear. While most signal sellers are honest and are backed by a genuine reputation, it’s wise to be wary when choosing one.

#2) Trading systems

One of the most prevalent scams is that of trading systems used to start Forex trading online. Some sellers make over-the-top claims and promise absurdly high returns that might seem too good to be true. Many fall victim and spend hundreds of rupees buying such systems, only to find that the “robots” have dumped their money down the drain. Most of these automated online trading systems aren’t submitted for review nor are the claims made supported by substantial evidence. If it’s too good to be true, it probably is – so stay clear of such trading platforms.

#3) Broker scams

Your Forex broker, the one whom you trusted with your money, could be the one slowly working against you. Several Forex traders fall into the trap of unscrupulous agencies who claim to offer trading accounts with flexible bonuses, high leverage and other benefits. A few signs that should signal you of a scam are when the broker doesn’t allow instant withdrawals or when there are persistent problems within the trading station.

Be a winner, don’t be the victim. Keep an eye out for Forex trading scams in India and you’ll be able to make your way through the FX market a lot easier. It’s always advisable to choose the right broker, that’s fully regulated and is trusted by traders. You can’t go wrong with choosing WesternFX, Asia’s award-winning Forex broker.

Why mobile trading is not the right way to trade Forex?

Technology has opened up endless possibilities in Forex trading. Think about it: you’re on a road trip and you suddenly receive news on a major economic event that could turn your trade around. You immediately pick up your phone and pull out of the trade. That’s mobile trading – and there’s an increasingly large number of Forex traders in India who’re turning to this medium to make money in the FX market. On the surface, mobile trading might seem like everything a trader needs offering convenience, ease of use, and the ability to trade from anywhere. But the reality is harshly different.

Let’s take a look at some of the reasons why trading on Forex exchange in India using your mobile devices may not be the right choice:

1) Connectivity issues

Despite massive improvement on the connectivity front by cell phone providers, your mobile devices are still susceptible to fluctuating connections that are harmful for your online trading performance. In the Forex market, even a few seconds/ minutes can spell the difference between a profit and a loss, which is why fixed-line connections are always deemed the best.

2) Susceptible to over trading

Users are constantly hooked to their mobile devices. Forex traders who choose to trade on it will have access to their trading account all the time. While it’s a great way to constantly monitor the markets, on the downside, it increases market exposure and may result in over trading. This habit can be detrimental to one’s trading performance as it’s advised to take some time off the online trading platform for better results.

3) Small screen size

The average mobile screen size ranges from 4 inches to 7 inches. Compare that with your trading account setup on desktop/laptop and you’ll know why size matters. Everything; right from the charts to other vital indicators, must shrink down onto this limited space or be eliminated entirely. These limitations may adversely impact trading on the forex trading market in India.

4) Limited platform performance

Most mobile platforms are optimized versions of the platforms that are originally written for desktops, and thus, the expected performance isn’t up to the mark. Bugs, glitches, slow-loading times or poor UX can rob the convenience of using mobile for trading and complicate matters.

5) Deviates your from your focus

It’s not that computers don’t pose a distraction, but mobile phones can multiply it times ten. You might get inbound calls, notifications or other distractions, that will sway you from your actual goal. Remember, focus is the key and if you lose that you’re bound to make mistakes that will eat into your investments.

While mobile trading offers you the convenience of Forex trading on-the-go, you need to be mentally prepared to face delays in execution, price updates and other issues that arise. For optimal performance, you need to adopt a multi-pronged approach wherein you trade using multiple platforms without restricting yourself to one. WesternFX, a leading Forex broker, offers MetaTrader 5 which can be accessed from multiple devices.

3 Trading Strategies that Even Beginners to Forex can Master

Being one of the largest financial markets in the world, the Forex market has a huge number of participants. Every trader approaches trading with a different angle, which means that for newcomers, there are tons of resources available on trading strategies. The downside to the sheer volume of information available is that it ends up confusing a new entrant into the Indian FX market. Most techniques used by seasoned traders are quite complex, and hard to master. Beginners are better off starting with something simple and befitting to their limited knowledge, and slowly progressing towards conquering other trading strategies.

If you’re a beginner and are caught in a dilemma as to which technique you must adopt, then this article will introduce you to some of the simplest online trading strategies. Let’s take a look:

#1) Breakout

Markets mostly range between bands of support and resistance. A breakout occurs when the market moves beyond the consolidation, displaying a new high or low trend. Knowing when the breakout occurs can signal the possibility of a new trend, allowing you trade accordingly. A new high announces the possibility of the beginning of an upward trend while a new low dictates the opposite. You need to tune a breakout strategy that reacts to the formation of such trends. 

For long-term strategies, adopt a time-based approach wherein you hold the position for a period, before making an exit. You can even adjust the duration to hours instead of using days. Use appropriate stop loss to alleviate losses in your trading account when things don’t go in your favor.

#2) Moving average crossover

This strategy for beginners to Forex trading in India uses a simple moving average (SMA). To implement this, you need to use a 25-day short SMA and a 200-day longer SMA in conjunction. The short SMA follows the actual price quite closely whereas the longer one observes a smooth price movement. In areas where the shorter SMA crosses the other one, a change in trend is depicted. Wherever it moves above it, it implies that new prices are higher than the old ones and sends a buy signal. When it moves below, it suggests that a sell is in order.

Let’s use this strategy in an example: Suppose a breakout occurs prompting you to buy. Cross verify with the SMA chart. If the short one is above the long SMA, place the trade, otherwise, wait it out till it does.

#3) Carry trade:

While this might not be a strictly beginner-only strategy, since most experts in the FX market use it, it’s nevertheless something beginners can master quickly. It involves Forex traders profiting from the difference in yield between two different currencies.

Suppose you buy the USD/INR currency pair and the base currency has a high-interest rate compared to the quote currency. The positive interest rate differential will add profits to your account. The more currency you command, and the higher the leverage you use, the greater the yield. But there’s also elevated risk implanted into it that might cause you to lose money if you end up on the wrong side of the Forex exchange.

It’s better to back test these strategies on a demo trading account in India. WesternFX, a leading Forex broker, offers a free account that you can use to test the field before you get onto the live online trading platform.

5 Reasons Why Forex Traders Lose Money in the Market

Forex trades can swing two ways: either up or down, which should mean that there should be 50% winners and 50% failures in the market, right? Wrong! Despite what the 1:1 risk/reward logic dictates, there are over 90% of traders who end up losing their money in the market. So, how can traders make it to the proportion that actually makes money?

For starters, you might have to probe if you’re really into trading. Most people in India who start Forex trading, do so to get away from the drudgery of 9-to-5 jobs. But it’s not the sole conviction to make money that can guarantee success in the market. 

The first step is to identify the common mistakes that traders make and to avoid them when you venture into trading:

#1: Plunging into live trading directly

You might have it all: the knowledge, the confidence, the money and the passion for beginning trading right away. But what you don’t have is practice. Skipping out on demo trading or not spending enough time on it can leave you unprepared.

Solution:

Get a Forex demo trading account. It’s recommended that you sign up with a reputed Forex broker such as WesternFX that provides a demo account emulating the live scene.

#2: Not accepting losses

Remember, losses are a part of the game, and there’s nothing you can do to avoid that. Most traders fail to accept this fact and end up undergoing a dramatic swing of emotions when they lose. Some even end up taking rash decisions and jump right back into the market to recover money, but in the process, end up losing more.

Solution:

Accept losses. They are inevitable. Formulate a risk management plan and maintain a neutral mindset that will prevent you from giving in to emotions.

#3: Trading too much

The more you trade, the more money you make – that’s what a particular section of traders believe. However, this can lead to market addiction and unrealistic goals. The market is volatile, and chasing the price without a clear strategy is considered a gamble, that could result in losses.

Solution: 

While it seems paradoxical, it’s better to refuse to enter the Forex trading market sometimes to make profits than to trade all the time.

#4: Refusing to adapt

While it is necessary to have a clear plan, it is also necessary to be flexible. Refusing to adapt to market conditions and sticking to the same strategy can end up in losses.

Solution: 

Forex trading in India is prone to fluctuations based on trends. It is vital for Forex traders to distinguish between trending and ranging markets, and apply the right strategy accordingly.

#5: Trading without professional assistance

No matter how much you think you’ve mastered Forex trading, you still have a lot to learn. Not gathering insight from seasoned professionals will deprive you of valuable knowledge, which can, in turn, affect your chances of making money in the Forex exchange.

Solution:

Learn from professionals. Most online trading brokers in India provide excellent support, allowing traders to talk to experts and revamp their trading game.

Success in the Forex trading market isn’t an assurance. However, you can multiply your chances of making money by teaming up with a reputed Forex broker. WesternFX is a leading brokerage with a clientele base that spans across continents. Amplify your profits by opening a trading account now!

The Role of Confidence in Good Trading Psychology

When it comes to psychology in Forex trading, there would be three major parts to it – confidence, discipline, and consistency. The psychology that one adopts during trading is more important than other aspects of this field such as a good strategy and the ability to manage risk. The right mentality is the foundation for the other two. In this article, we’re going to be exploring the relationship between confidence and discipline in the trading sphere, and how the former is vital for establishing a good trading psychology. 

The importance of confidence

Being faithful to a particular strategy for a prolonged period would be impossible without having faith in the strategy. One may be able to muster the right focus and the right discipline for this, but a few unsuccessful traders are sure to displace one’s focus in his strategy. 

After a series of losses, any ordinary trader would be faced with the temptation to move away from his established strategy. This impulse derives from the need to avoid losses, and it would only intensify as losses pile up. Confidence in one’s system would slip every time a loss occurs, leading to a widening sense of anxiety and doubt. 

How to acquire confidence

The prime source behind one’s psychology would be their expectations and how reality responds to it. Anxiety and doubts set in when one’s expectations are not delivered. 

When one knows what to expect from the Forex exchange market in India in a more realistic light, the chances of losing faith would be minimal. As a result, the best-known way to establish confidence is to have a method to expect more accurate results when trading. You might ask yourself how this is possible. However, a person can adjust his expectation when trading with the help of analysis, charting methods and the help of system metrics. These figures give one a more measured and realistic view of the restrictions and probabilities of a market and how the outcome of a particular transaction might go over a period of time. 

The major advantage here is that one offsets the chances of raising high expectations and inviting more anxiety into his psychology as a result of it. The absence of low confidence, anxiety, and doubt are sure to bolster one’s presence of mind and add to his trading discipline.

WesternFX is among the leading brokerages in this region, offering online trading services to clients in India, Pakistan and many other countries. If you need more insight into the tenets of Forex trading, then get in touch with us. We have helped countless trading participants elevate their profits in this zone and we can help you too!