WikiFX Live: 10 Essential Skills for New Trader

WikiFX will sponsor a live event on August 3, 2022, at 15:00 (UTC +8), discussing “10 Essential Skills for New Traders.” The online event will be hosted by Ron Merca, a Master IB, Professional Network Marketer, and influencer. Ron Merca is also the founder of Fortune Prime Global Philippines or FPG. Fortune Prime Global is a UK-based forex broker that is regulated by the Vanuatu Financial Services Commission (VFSC). WikiFX live room is where you can watch the online event (https://liveroom.wikifx.com/en/live/202208032361744698.html).

A discussion centered on the following topics:

• Why do most traders fail？

• How to manage your emotions

• Finding the right mentor

Topic overview:

Why do most traders fail？

Many forex traders fail because they are undercapitalized for the size of the trades they make. Forex traders are compelled to take on such massive and volatile financial risk due to greed or the prospect of controlling vast sums of money with a small amount of capital. For example, at a 100:1 leverage ratio (a fairly common leverage ratio), a 1% change in price results in a 100% loss. And any loss, no matter how minor, such as being stopped out of a trade early, exacerbates the problem by reducing the overall account balance and increasing the leverage ratio.

Leverage not only magnifies losses but also raises transaction costs as a percentage of the account value. If a trader with a $500 mini account uses 100:1 leverage to buy five mini lots ($10,000) of a currency pair with a five-pip spread, the trader will also incur $25 in transaction costs: (1/pip x 5 pip spread) x 5 lots. They must catch up before the trade can begin because the $25 in transaction costs represent 5% of the account value. The greater the leverage, the greater the transaction costs as a percentage of the account value, and these costs rise as account value falls.

While the forex market is expected to be less volatile in the long run than the equity market, it is clear that the inability to withstand periodic losses and the negative impact of those losses through high leverage levels is a disaster waiting to happen. These issues are exacerbated by the fact that the forex market contains a significant level of macroeconomic and political risks, which can cause short-term pricing inefficiencies and devastate the value of specific currency pairs.

How to manage your emotions

Some suggestions for dealing with your emotions

• Don't act out of rage. Hold out until reason takes over when you're angry. There is no worse trade than a “revenge” trade, in which a trader immediately returns to recoup a loss. To get back on track, consult your trading journal.

• Don't get married to your positions. It's easy for a trader to become stubborn and hold on to trade simply because he 'hopes' it will turn around. Close a losing trade as soon as possible, accept your loss, and move on. The next step will be suggested by your trading journal.

• After each trade, take a break. Trading moves quickly, so don't get caught up in the excitement. Take a break to think about something else, then return and deliberate. Look through your trading journal for the next idea.

• Set a fixed point where you will stop. Stop for a good long break after three, four, five, or whatever number you choose. Most mistakes occur when one trade follows another. Examine your trading journal and your strategy.

• Keep no record of profit and loss. Doing the math on your earnings will only stimulate your emotions. Concentrate on developing your trading strategy by reviewing your trading journal. Then, at the end of the trading day, you can see how well you did.

• Maintain your focus on the plan. Don't let the outcome of a few trades alter your overall strategy or approach. Stick to what you've learned and planned - use your trading journal to plan your next steps.

• Prudence should not be confused with fear. You want to trade wisely, employing logic and reason. This may cause you to postpone a trade. However, make certain that your decision is based on sound judgment rather than fear. Fear can derail your trading by preventing you from entering a trade. Use your trading journal to determine whether the trade makes sense, follows previous wins, or simply does not make sense.

• Keep an eye out for greed. Greed can cause you to stay in a trade when you intended to exit, hoping for a little more profit. Such trades run the risk of backfiring just when you thought you were winning. Use your trading journal to determine the best exit points based on past performance.

• Take care with your stops. Stops and limits should be approached with caution to avoid making rash decisions. It hurts to have a trade stopped out, but you will save money in the long run. Your trading journal can provide you with useful comparisons on stop-loss levels.

• Never give up. Every trader reaches a point in their career when it no longer seems worthwhile. Allow yourself to be intimidated. Trading is difficult, but it is possible to succeed.

Finding the right mentor

Since the pandemic hit the world, we all know that forex trading has become the most popular alternative way to make money. Many learning centers are now offering services to people who want to learn how to trade forex. There are numerous approaches to finding the right mentor. One of the best mentors to look for has extensive experience in online trading, particularly forex. The experience of your mentor is extremely important when beginning your journey in forex trading.

WikiFX, on the other hand, has been providing educational articles to help traders in their day-to-day trading. When using the WikiFX App, traders can implement a variety of ideas and strategies. WikiFX also provides daily forex market news to help traders plan their day-to-day trading. There are numerous features that a user can learn by using only one app, the WikiFX app.

Ron Merca will teach us how to manage all of these characteristics to avoid failure and achieve success in online trading.

Stay tuned for more WikiFX live events every week. Download the WikiFX app for mobile access to live events.