Forex brokers will rarely teach traders good money management skills, though almost all brokers will offer some sort of education, therefore it’s important to also learn on your own. The main idea of the whole trading process is to survive! Survival forex forex investment management the first task, after which comes making the money.
One should clearly understand that good traders are, first of all, skillful survivors. Those who also have deep pockets can additionally sustain larger losses and continue trading under unfavorable conditions, because they are financially able to. For an ordinary trader, the skills of surviving become a vital “must know” requirement to keep own Forex trading accounts “alive” and be able to make profits on top. As you can see, this simple decision — a money management approach — can have serious consequences if misjudged. Forex trading is a high risk investment. All materials are published for educational purposes only. Yet, same as years ago, traders keep making mistakes, recovering and just to find that there are more challenges ahead.
Any attempt to trade without analysis and studying the market is equal to a game. Never invest money into a real Forex account until you practice on a Forex Demo account! Allow at least 2 months for demo trading. A good demo account to start practicing with could be, for example, FXGame from Oanda. Trade with the trend to maximize your chances to succeed. Trading against the trend won’t “kill” a trader, but will definitely require more attention, nerves and sharp skills to rich trading goals. When a trend is up you don’t want to be selling.
When a trend is down, you don’t want to be buying. Always take a look at the time frame larger than the one you’ve chosen to trade with. It gives the bigger picture of market price movements and thus helps to clearly define the trend. For example, when trading with 15 minute time frame, take a look at 1 hour charts. In the same way: trading with 1 hour charts would require obtaining a picture of daily, weekly price movements. If a trend in Forex is hard to spot — choose a bigger time frame. Up and down market patterns are always present.
Make sure you know the dominant trend, unless you are a scalper. One important difference between a successful and an unsuccessful trader is that the first is able to survive under unfavorable market conditions, while an unsuccessful trader will lose his account after 10-15 unprofitable trades in a row. Even with the same trading system 2 traders can get opposite results in the long run. The difference will be again in the money management approach. Don’t try to revenge after losing a trade. Don’t be greedy by adding lots of positions when winning. Overreaction blocks clear thinking and as a result will cost you money.
Overtrading can shake your money management and dramatically increase trading risks. Choose the time frame that is right for you. Choosing wisely means that you are comfortable and have enough time to analyze the market, place and close orders etc. Some people can’t wait for hours for the price to make a move, they like action and therefore prefer smaller time frames. On the contrary, for others 10-15 minutes is a hustle to be able to make the right decision.
Forex trading is a high risk investment. All materials are published for educational purposes only. A lot of traders think that a big broker is better than a smaller one because a larger company has many advantages such as economies of scale, a better liquidity position and is the subject of higher scrutiny from the public and the regulators. While this basic assumption has some merit and to some degree “bigger is better”, it is not a total correlation between size and quality of forex brokers. If you want to find out which are the biggest forex companies in the world, you should continue reading this article. However, if you want to know which are the best forex brokers in the world when it comes to trading conditions and customer satisfaction, you should check our special forex brokers ranking.
How to measure the biggest forex companies When it comes to measuring the size of a company, there are several criteria that are generally used. The most common criteria used in ranking companies by size are market capitalization, revenue and profits. Also, when it comes to financial companies such as banks or insurance companies, another way to measure size is by comparing the total assets under management. This would leave most forex brokers out of the ranking.
It is also important to note that market capitalization represents the value investors give to a specific company. A small but profitable company can have a higher market value than a large company unable to generate profits. Revenue – While ranking forex brokers by revenue will render more accurate results, this criteria is still far from being relevant in this particular case. A broker’s revenues will come from the commissions it charges and the spreads the traders have to pay. A broker with higher commissions and spreads will generate more revenue than a similar sized broker with lower spreads. There is also the problem of integrated products offered by the companies. Profits – Ranking forex brokers by profits is totally irrelevant, as this criteria includes the same problems we identified when discussing about revenues, and many more.