Prepare to trade Forex Technically

I am not referring to Technical Analysis here. What I am trying to bring to fore are the procedures involved in trading Forex. As we know, trading over the internet presents unique opportunities and is subject to special risks. Trading financial instruments must be taken critically as it is serious business.  Understanding your risks and developing measures to moderate them is very important with emphasis on preserving your capital.

For instance, if you are trading a Demo Account, you still need to be careful because you are training yourself for trading real money. I remember very vividly in my early days of trading when I thought I knew it all. I was making a lot of money in my Demo Account and I did not train myself properly. By the time I put in real money, it was a different game all together. I know a lot of you reading this can relate to it. The lesson to be learned here is “Do not train yourself incorrectly”.

I will enumerate some of the risks involved here.

Since connecting to a broker and executing trades are done over the internet, there could be some points of failure, which could arise from the broker’s software, broker’s internet connection, broker’s server or even connection failure from your own service provider. Another major one being experienced here in Nigeria (and some other parts of the world) is constant power failure. Hence, precautions must be taken in this regard. You could think of having a battery backup system (UPS) to run your computer during outage and making sure also that your generator has enough fuel in it and is running properly.

Like I mentioned earlier, trading is serious business and you should be equipped in the best way that you can. I recognize that traders come from all over the world and all walks of life, so the best way I am referring to means the best that is available to you. As a precaution, because of my location here in Nigeria, I make use of two Internet Service Providers in case one of them fails.

Your computer must be up to date, healthy and stable, free of errors. In these days of Smart Phones, most brokers now have a mobile version which can be installed on these devices.  A major advantage of the Smart Phone is that you can check your trades on the go and make modifications as you deem fit. Gone are the days that you have to wait till you get back to the computer before you can gain access to your trade.

Trading Procedures

The principles of verification apply no matter what platform or broker you are using. When you press the Buy or Sell button, be sure that what you wanted to happen, actually happened.

Always verify that your trade was placed exactly the way you wanted it with the correct lot size, the correct currency pair etc. Of course, you don’t want to be executing a trade in the EURUSD pair for instance and mistakenly hit Gold. The results can be unpleasant. Adjust every other thing like your take profit and stop loss. This same verification also applies when you are exiting a trade. Be sure you are exiting the right one.

Remember, by getting it right when you are still demo trading tends to lead you to a greater chance of success when you are doing the real thing.

Happy Trading!






For those of you in Ibadan, Nigeria, we hold a forex trader's forum regularly.  
You can send a mail to questconcept1@gmail.com for more information.
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