Updated: Oct 19, 2018
When individuals start to invest, they initially focus on huge profit or return. Unfortunately, many of them have never considered about the risk. With this weakness, there are thousands of scammed investments to cheat and stole their money. In fact, long-term investing is about ‘wealth creation’ in which investors must accept a certain of risk in the pursuit of higher rewards. If you aim at being a successful long-term investor, here are 5 things you must concern.
1. Determine the maximum risk that you can handle
One basic principle for investing that you should keep in mind is that it is impossible to always win and take profit from every single trade. In Forex market, trading occurs when you forecast what the price shall be; it can be either going up or going down, and you open buy or sell position. Your decision may be right (you earn profit) or wrong (you lose). To be a successful trader, every investor should determine the maximum risk you can resist for, how many percentages of the capital can be drawn down. Also, how many percentages of the capital you can risk for each trade. Once the acceptable risk is specified, investors can strictly manage their trading orders, in which when to execute the order, when to cut loss or exit with desirable profit. Cutting the loss and open the new trades is much better than resisting for the unlimited risk and seeing your money blown away.
2. Use reliable and profitable trading strategy
To be a successful investor in Forex market, you do not need so many strategies to messy your life. Find the right strategies that match your style and strict to them. The strategies or systems that you will invest in must be long-term profitable that allow your capital to continuously grow with acceptable and limited risk. Those trading strategies must be reliable and tested on historical data and forward test with real money to prove whether they truly generate profit.
3. Regularly search for trading opportunitiesAs you know that Forex market operates 24 hours during weekdays, the price of all products keeps moving all the time. It means you may get hundreds of chances to trade in the market. When you have desirable strategies, you should regularly keep your eyes on the price to immediately open the orders when the price conditions meet your criteria. If you miss it, you lose a chance to gain profit. But don’t be too stress, if you miss it, just ignore and look for a new entry point. Discipline is one important key to succeed in this market.
4. Learn when to cut your losses, and sell your winnersEmotions is a major disturbance that obstructs the growth of your account. Once executing the orders, people commonly keep their eyes on the movement of the price which may distort their mind and strategies. They can make a wrong decision with bias, in which exiting too fast with little profit or standing too long with a hope that the price will return to the direction as you wish. This may end up with ruined account.
When you decide which profitable trading strategies you want to use, you would rather strict to those strategies – their entry point, stop loss position and take profit position. One you execute the orders, just simply let it go, wait and see the result. It can only result in either winning with profit or losing with preset loss. As the stop loss position is clearly set, there is no chance of losing the whole account.
5. Use the automated trading robot (EA)
Millions of technologies are introduced and many of them disrupt the world, including using automated trading robot, also known as ‘Expert Advisor (EA)’. Automated trading robots are the combination of profitable trading strategies that will automatically execute the orders whenever the price reaches preset trading conditions. Nowadays, people commonly use automated trading robots in Forex market. They can generate lots of profit even though they do not have any basic background on trading.
Using EA in Forex market costs less time consumption as the automated robots will work on your behalf. They will keep watching at every single movement of the product price for 24 hours and as long as the market runs. They will seek for trading opportunities and will automatically buy or sell when the preset conditions are met. Using a good automated EA also helps the users to eliminate emotional disturbance in which they have a rigid take profit position and stop loss position. The orders will be closed only when the criteria are met. You get no chance to hesitate. To be a successful investor, using good automated trading robot is the best choice. But you have to keep in mind that not all the EAs are good, you need to analyze and reasonably pick the good one. Once you find it, just take a rest and let your money grow.