Foreign exchange operation
 

Rule one: set the appropriate risk return ratio

  •       Before the transaction, traders should determine the transaction can bear the loss, learning to use the risk-reward ratio as a basis for transaction reference is conducive to raising trading levels.
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  •       Neophyte traders inevitably make the following mistakes when entering the foreign exchange market: trade in as soon as possible, frequently trade, and completely forget to add venture capital management to the trading concept. Proper risk management is crucial to the trading plan, and it helps us to know exactly where a risk event has caused the market price to reverse our dealings.
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  •       So what exactly is the risk-reward ratio and how to apply it to forex trading? First, the risk-reward ratio relates to what we expect to earn at the admission price and what is the maximum allowable loss in the money account when a loss occurs. Understand risk returns Manage risk by allowing traders to set desired results before trading. The point is to look for a better risk-reward ratio for the trading strategy so that we increase our marginal revenue when the price is in the same direction we traded, and on the contrary, we lose the stop loss set before the transaction.
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  •       Before each transaction, investors must conduct a risk-return analysis, generally speaking, the ratio of risk to reward should be a maximum of 1: 2. Suppose a forex investor buys euro against the dollar at 1.3000 and he expects to have a 50 basis point profit, then the risk he is exposed to can not exceed 25 basis points.
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  •       The correct way is to set a take profit at 1.3050 and at the same time to set a stop loss at 1.2975, then the investor is expected to receive a return of two basis points at the risk of taking every single point . Some investors set a risk-reward ratio of 3: 1. This strategy may make them often make a profit, but once the loss has been enough to make them lose all the light. In the long run, this will only increase the losses to investors. 

Rule two: make good use of mobile stops

  •       After setting the appropriate risk-reward ratio, investors may lose sight of the importance of making appropriate adjustments following fluctuations in exchange rates, often making a trade fair loss from profits. Citing the above example of trading, if the exchange rate rose to 1.3040 after investors traded, but the high lack of upward momentum turned down, even below the 1.2975 stop-loss order set by investors, investors will be from the initial profit of 40 basis points Become a loss of 25 basis points.
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  •       To ensure the profitability of the transaction, investors can place a stop-loss of 30 basis points. When the exchange rate rises to 1.3030, the stop-loss order of investors will rise by 30 basis points to 1.3005 at the same time. Even if the exchange rate subsequently falls sharply , Triggered a stop-loss order, investors can also keep the profit of 5 basis points. The general set stop strategy is:
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  •       1) The set base point needs to be above the risk-taking base to ensure that the trailing stop is profitable.
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  •       2) According to the volatility of different currencies set the basis for the mobile stop, such as the euro against the US dollar daily volatility is 82 pips, one-way trend in the market, investors should not stop moving the base set at 40 above, To increase the chance of triggering a move stop. 

Rule three: hold sufficient funds

  •       Foreign exchange investors must hold sufficient funds for investment. In foreign exchange transactions, the loss in between is inevitable. For novices, it is easy for new players to lose money after they have experienced a slight fluctuation in the foreign exchange market due to over-trading. Or they are often forced to liquidate positions and are often forced to liquidate their positions, thus often missing the next opportunity to enter the market. Investors can follow the volatility of different currencies to measure whether the funds held by them are enough to withstand the market turmoil. At the next judgment, investors may refer to the average daily volatility of the following four major currencies in the recent three years:
  •       EUR / USD: 82 basis points
  •       GBPUSD: 101 basis points
  •       USDJPY: 105 basis points
  •       USD / CHF: 144 basis points
  •       Foreign exchange investors need to understand more than the above three investment and financial rules, and strictly enforce each transaction is even more important. To know that foreign exchange investment is not a shortcut to go, as long as investors continue to learn from the failure to learn from experience, coupled with the correct basic analysis and technical analysis of knowledge, I believe in the foreign exchange investment is ultimately unfavorable. 

Rule four, the correct concept will help foreign exchange investment success

  •       1, want to make money in the market, first learn how to lose money: any foreign exchange investment in the initial period of time to enter the market, must be losing money. Investors should consider this time is not how to make money or how much money, but should focus on how to control the loss and learn the correct trading knowledge, work for good things, we must first of its advantages. Grasp the correct trading philosophy, the correct trading methods, profit will not leave you too long. And many people are in the initial should learn and pay tuition time, let myself bruised, crushed.
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  •       2, will always limit the loss within their own acceptable range: As a trader, always do the worst plans, such as you can do such a psychological demonstration, I now a continuous loss of 5, I can not accept? why? If you lose 10 consecutive pen, I can not accept? why? If you let yourself through the above psychological demonstration, then you will reduce the psychological pressure on the transaction. Only when the mindset of the trader is stable will the trading result be stable.
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  •       3, to develop and comply with the rules of the transaction is essential: Your trading rules are formulated by you in the formulation process should first consider the enforceability of the rules, if not enforce the rules, might as well not to develop. Once the rule of feasibility analysis has been formulated, it must unconditionally comply with the rules of foreign exchange transactions, the first rule, the other side, even if you think the transaction must be a loss by the rules, then you have to follow the rules, because the rules of the first , More than your personal preference. The result may be really a loss, you can modify the rules in the subsequent practice, but the transaction is to do the right thing, the only way you can become a long-term winner.
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  •       4. It is important to study attendance than research admission: Many foreign exchange traders focus their research on admission. I think this should be due to misleading the industry and the pursuit of certainty by human nature. In fact, it is good Admission skills are just the beginning of a deal. The success of a long-term deal is whether you have a playing skill that has a strategic advantage.
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  •       5, learn and make money management: Money management is to tell you how many positions each sale, so you have to learn and study some of the game's knowledge. More standing in the long term and strategy to think about the issue, you may go further and go better.
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  •       6, always follow the trend: Speaking simple, in fact, many foreign investors do not understand the trend in the end what exactly, no one will understand, because the confirmation of the trend affected by time and space, the definition of each person is not same. So you should let your own trading system tell you what is the trend, what should be done if it is a trend? Of course, follow, how to follow, but also to determine a standard out. This is the correct and pragmatic method of research.
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  •       7, the transaction should focus on how to do, rather than how to think: Once you start trading, it should be your trading rules and trading plans to implement, but not with how you think too much. Because human nature is responsible, we are not in a position to take charge of what we are responsible for, so we need to replace it with simpler things because of the Boulevard to Jane.
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  •       8, stand on a higher angle to think: you must make it clear who is losing money in the market, who are making money. If you do not understand, then you lose money must be yourself. Not only that, but also think about why people make money to make money, losing money why people lose money.
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  •       9, always calm state of mind: This is very important, but it seems a bit harder to do. Because he needs to meet at least one condition, that is, in your own design time period, you have to be on the winning position, may have such a good attitude. If you think there is no win-win strategy for the FX investment industry, then you need to work hard to find out.