“Financial markets are known to be very liquid and at times also very volatile. It is double-edged. It is an advantage when the markets go as per the trader’s anticipation and it is a disadvantage if the trader makes the wrong market forecast.” These are the words of one of the top financial market trading experts at Olsson Capital.
Anyone will tell you that trading the financial markets is very risky and it requires a keen eye. A small mistake would put all your savings into risk and you may end up losing everything.
However, let’s look at the brighter side of it. Financial market trading is very profitable if done in the right manner. It is one of the investment opportunities where you can easily double or even triple your capital in a very short while. You can also increase your money in seconds. It all depends on your trading strategy and how profitable it is.
How you trade matter a lot. It is determined by the trading strategy that you are using. But even without checking on the type of trading strategy you are employing. You should ensure that your trading strategy makes more profits than losses at the end of the day. You can’t have a strategy that makes consecutive losses and you still cling on to it. Before using any trading strategy on your real trading account, you should first test it thoroughly on a demo account.
Some of the trading strategies like scalping tend to be very profitable but also very risky since the trader does not use any risk management strategy other than probably avoiding to trade during the news. To use scalping, the markets should also be very volatile since you do not want the trade to stay for too long in the market. Therefore, it is best suited for the forex markets, specifically for the most traded currency pairs like EUR/USD. Another thing with scalping is that your account should have a significant amount of funds to sustain some abnormal market movements especially those that are not in your favour. You could open a trade and the market first moves in the opposite direction before it moves in your direction and you will need to have some margin in your account to allow the trade to stay in the market without being stopped out.
In scalping, the larger the lot size, the larger the profits. However, this cuts on both sides since if you close the trade as a loss, the loss will also be magnified. Therefore it is a balancing act since again you don’t want the trade to stay in the market for too long. To avoid risking too much, you should consider using technical trading indicators in case you are trading manually. The technical indicators will help in identifying the correct entry and exit points.
Enter and exit points
It is unfortunate most trader concentrate very much on the entry points without taking into account when to exit the market. If you exit the market too early, you will end up making lesser profits than you would have made. On the other hand, if you exit the market too late, you may end up making losses instead of profits. That is why you are required to have something that tells you when it is time to exit the market. If you exit the market at the right time, there will be lesser probabilities of feeling the urge to revenge trade since the opportunity to stay in the market will have ended and it will be visible that the market is not ripe to place an order.
Technical indicators and trading signals
If you find it hard to use the technical indicators, you can choose to enrol with a signal provider so that you can be receiving trading signals. Your work will be placing the right trades according to the signals. With signals, you will also have to be prompt in placing and exiting the orders since a delay would mean losses or reduced profits. There are lots of trading signals providers on the internet and you will only have to choose one depending on the financial market you are trading.