“High Risk High Return” – And Forex traders or new users get carried away towards the high return belief and ignored the risk factor attached to it. In a recent survey made on Forex account opening some facts is revealed which says 91% of Forex account opened is closed down in first 3 to 6 months, so does this means only 9% of retail Forex traders actually trades or makes profit? No, this means a fresh mind is losing interest in trading due to lack of knowledge or is it due to wrong selection of Forex brokers who have misguided just to open up real Forex trading account.
Five most important things that one ignores before opening a Forex trading account or while selecting a Forex brokers for trading
- Little information is always dangerous and leads to devil’s home: A well said quote which justifies here, as mostly Forex brokers gives little or basic knowledge about Forex trading and encourage new traders to open Real Forex Account for trading. This results in trades falling in margin call in very initial stage. Only “Forex Trading Education” can solve this, so always take full training of Forex Trading from Forex brokers if the facility is availed to you.
- Frequency of Trades: The more trades you place the more money you will lose, no Forex broker is going to stop you as they are interested in commission they are getting from your trades. The equation says “High Risk High Return”, but that does not say frequent or regular trades. A wise trader would always be in search of a better trading opportunity for profit making as trading itself is a risk and returns are high profit that you make using right tactics.
- Dealing Desk: Always go for a Forex brokers that does not offer dealing desk. The reason why one should not trade with dealing desk option, as in that case brokers may use dirty techniques or tricks to screw up your Forex trading account for sure.
- Term about Trade Execution – Pay special attention to Terms and Service. Most brokers fill your entry offers and that too at worst possible price. It has been observed that most of traders missed their profit but do hit stop loss and this mainly happens during any financial news release are in line for e.g. at first Friday of every month when US Farm payrolls are declared during NYSE trading session.
- Variable Spread: A spread is the price difference between ask and bid usually the spread for EUR/USD pair is 2 pips for most Forex brokers. Most brokers’ follows variable spread method and they usually don’t disclose or guaranteed about how wide spread could become. What they disclose in Terms and Condition is “Under normal market condition we offer 2pip spread for EUR/USD currency pair”. And the funniest thing is that there is never Normal Market Condition as market is full of uncertainty. So it would be a nice practice if things related to spread are cleared well in advance.
If one follows right approach for Forex trading, then anyone can make a lot of money from this real exciting world of Forex Trading. I hope this would bring some light in preparing yourself with right tactics