Stirring foreign exchange seems complicated, but in fact it is very regular. Grasp these rules, even for novices, you can taste the joy of making money in a short period of time. Here, we offer the novices the three magic weapons to help make money.
First, speculation in foreign exchange must take advantage of the trend
The most direct manifestation of the law of market movement is the trend. The only way to treat trends correctly is to follow the trend. This is the first magic weapon to make money and even survive in the speculative market.
A famous American investment expert Stanley Crowe once said: “The most profitable and most reassuring operation is always operated along the trend of the time. The worst and the most stressful operation, total It’s when I build or hold the money to lose money.”
When learning a transaction, a novice must understand the direction in which the price is set up, which is of great value to the success or failure of the transaction. Determine the direction through objective analysis, then jump into the trend, and stay in it, drift with it, as long as the trend continues to be beneficial to you, you must hold the position to sit on the profit. Learn to trade in the direction of the trend, and in this process of turbulence, through the management of funds, to get excellent operational results. This is the essence of the trend.
For beginners, the recommended analysis tool is the moving average. As a simple and clear trend indicator, the moving average has a good effect in following the trend, which has won the favor of the actual players. For specific applications, please refer to the Grambi Average Line Eight Rule and Triple Screen Trading System.
Second, the foreign exchange must be caught
Newcomers who have just stepped into the transaction must pay attention to cultivating system trading thinking, not to ignore the gains and losses, but to strive for long-term stable overall benefits. To do this, you must learn to choose among the many market opportunities, seize the big opportunities, and give up small opportunities. Therefore, the two core factors for evaluating opportunities, namely the risk-to-reward ratio and success rate, must be firmly grasped. This is the second magic weapon for novices to make money.
The so-called risk-to-reward ratio, that is, the ratio of the potential risk loss of a transaction to the expected return, is the risk-to-reward ratio. For example, we intend to execute a transaction. After analysis, if our estimated potential loss value is 100 points and the profit target is 300 points, then the risk-to-benefit ratio of the transaction is 1:3.
The so-called success rate, that is, the probability that the transaction will be profitable. For example, in 10 transactions, the profit rate is 5, and the success rate is 50%.
Suppose our risk-to-reward ratio is 100 points: 300 points, the success rate is 70%, which means that when we make 10 transactions, each time the profit is 300 points, the loss is 100 points, then the overall profit will be 300×7-100×3 = 1800 points.
Suppose our risk-to-reward ratio is 300 points: 100 points, the success rate is 90%, each time we lose 300 points, each time we earn 100 points, then in 10 transactions, the overall profit will be 100×9-300×1=600 points.
Considering these two core factors, the smaller the risk-to-benefit ratio and the higher the success rate, the more we must pursue.
Third, the foreign exchange must be limited
Restricting losses and retaining the principal, under this premise, holding positions with profit potential for as long as possible, and making profits increase, this is the third magic weapon to speculate and make money.
In the trading world, no one hundred percent predicts the correct “Holy Grail”, and all analysis and prediction is a possibility. Therefore, for market uncertainty, we must take measures, such as using stop-loss orders to control risk. Imagine the market risk. The lurking crocodile in this muddy bite your foot. If you can’t bear to give up this foot, the crocodile will swallow your whole body. The risks are inconsistent with the trader, so the novice has a clear understanding of the risks. After setting the stop loss, the trader will have a clear quantitative understanding of the bottom limit of the loss, which will help maintain a stable trading psychology.
While limiting losses, you must learn to make up for the losses caused by mistakes by making long money. Only when you are long can you make big money. Only by making big money can you make up for the losses caused by a lot of mistakes and have a balance. These balances are the final trading profits.
Investors who will not stop loss will definitely lose money. Only investors who stop loss will definitely lose money. Only investors who will stop loss and make money can taste the long-term profit.
For an investor who has just entered the foreign exchange market, even if your knowledge and experience are not as rich as some veterans, as long as you firmly grasp the three magic weapons provided in this article, and make money in the foreign exchange market through continuous practice. Not difficult.