Whether you’re a seasoned trader or new to the forex market, it’s important to execute your trades at the right time.
Here are a few things you need to consider before placing your trade.
Choose an instrument to trade
Choosing the right currency, stock, metal or other asset is the first step in entering a successful trade.
Things to consider:
- What assets have seen big moves up or down recently?
- Have recent big moves been against the longer-term trend or in the same direction as the trend?
- What’s making headlines on financial and trading news websites?
These questions and your research should help you spot which assets are presenting the right opportunities for a trade.
Choose your entry point
Picking the right time to buy or sell an asset is critical to the success of your trade.
Let’s imagine you receive an alert that the price of gold is falling sharply.
It may be a good time to enter a sell trade on gold to ride the emerging trend.
However, if you’re late entering your sell position, you may find that the price of gold has “bottomed out”. This would be a bad time to enter a sell trade, but may be a good time to enter a buy trade as the price recovers.
Enter Stop Loss and Take Profit Rates
Use technical analysis to determine what a good stop loss and take profit would be.
Usually, this would be within a range that the price has tended to reverse or slow down in the past.
For example, looking at an hourly chart for EURUSD, you may see that the price has been failing to break through the 1.10900 barrier for a few weeks. You may choose to set your take profit at around this rate to secure earnings before the price hits this range and begins a reversal.
Stop loss and take profit rates will also be determined by your risk appetite and profit targets.
By keeping informed of the forex calendar and reading the news to see if the market sentiment is changing, and with enough time and experience, you’ll learn to identify which reports are simply noise and which ones you need to consider to adjust your trades.
And if you follow these simple rules, you’ll master the art of entering a trade before you know it.
Fund your account now to get started.