Guidance for beginners in foreign exchange to make profits

Foreign exchange trading may seem complex, but in reality, it has strong regularity. By grasping these rules, even beginners can experience the joy of stable earning in a relatively short period of time. Here, we offer three tips for beginners to help make money in foreign exchange trading.


1、 Go with the flow


The most direct manifestation of market movement patterns is trends. The only way to approach trends correctly is to follow the trend and operate accordingly. This is the biggest weapon for making money and even long-term survival in the speculative market.


Stanley Crowe, a famous American investment expert, once said, "The most profitable and reassuring operation for me.",Always following the current trend when operating. The operation that suffered the most losses and felt the greatest pressure,Always when I establish or hold onto a losing position against the trend


When beginners are learning to trade, they need to understand that establishing the direction of price movement is of great value for the success or failure of the overall transaction. Determine the direction through objective analysis, then jump into the trend and stay immersed in it, drifting with it. As long as the trend continues to be favorable to oneself, one must hold onto their position to gain profits. Learn to follow the trend in trading and achieve excellent operational results through fund management during this fluctuating process. This is the essence of going with the flow.


For beginners, the recommended analysis tool is the moving average. As a concise and clear trend indicator, the moving average has a remarkable effect in following trends, thus gaining the favor of practical experts. For specific applications, please refer to the Grampy moving average eight rules and the triple filter trading system.


2、 Grasp the big and let go of the small


Newcomers who have just started trading should pay attention to cultivating a systematic trading mindset from the beginning, disregarding short-term gains and losses, but striving for long-term stable overall returns. To achieve this, one must learn to make choices among numerous market opportunities, seize big opportunities, and give up small ones. Therefore, for the two core factors of evaluating opportunities, namely risk return ratio and success rate, it is necessary to firmly grasp them, which are the second biggest magic weapon for beginners to make money.


The so-called risk return ratio refers to the ratio of the potential risk loss and expected return of a transaction,It's the risk return ratio. For example, we plan to execute a transaction, and after analysis, if our estimated potential loss value is100And the profit target is300Point, then the risk return ratio of this transaction is1：3。


The so-called success rate refers to the probability of successful trading and profit. For example, in10In this transaction, the number of profitable times is5Next, then the success rate is50%.


Assuming our risk return ratio is100Point:300Point, the success rate is70%This means that we are working on10During each transaction, the profit was always300Point, loss100Point, then the overall profit will be300x7-100x3=1800Points.


Assuming our risk return ratio is300Point:100Point, the success rate is90%Every loss300Point, profit every time100Point, then in the10In this transaction, the overall profit will be100x9-300x1=600Points.


Considering these two core factors, trading with a lower risk to return ratio and a higher success rate is what we strive to pursue.


3、 Limited loss holding


Limiting losses, preserving principal, and holding positions with potential for profit for as long as possible to increase profits are the third magic weapon for speculative profits.


In the trading world, there is no 100% accurate prediction of the Holy Grail, and all analytical predictions are a possibility. So, for market uncertainty, we must take measures, such as using stop loss orders to control risk. Imagine the market risk, this crocodile lurking in the mud biting your foot. If you can't bear to give up this foot in pain, the crocodile will devour your entire body.


Risk follows closely with traders, so beginners need to have a clear understanding of risk. After setting a stop loss, traders will have a clear quantitative understanding of the bottom line of the loss, which is beneficial for maintaining a stable trading psychology.


While limiting losses, it is necessary to learn to make money through holding on to make up for losses caused by mistakes. Only by holding on can one make big money, and only by making big money can one make up for the losses caused by a large number of mistakes and have some surplus, which is the final trading profit.


Investors who do not know how to stop loss will definitely suffer losses, and investors who only know how to stop loss will also suffer losses. Only investors who can both stop loss and make money can taste the taste of long-term profitability.


For someone who has just stepped intoforeign exchangeFor investors in the market, even if your knowledge and experience are not as rich as some seasoned professionals, as long as you firmly grasp the three magic weapons provided in this article and continue to practice diligently, making money in the foreign exchange market is not difficult.