Forex trading is a difficult profession. It takes a lot of time, patience, practice and learning. There are plenty of obstacles and many beginners simply give up. Those who don’t surrender that easily search for tips and tricks to avoid or at least minimize the pitfalls. What kind of advices can help beginners in forex?
Everyone who decides to enter the forex markets should realize that education is the first and foremost step toward success. It is extremely important to know the basics of forex trading, however the foundation of trading is hardly enough to start earning any money. To become profitable forex trader you will have to learn much more than just the basics. To make things even worse – a constant “updates” of your knowledge is required in order to continue the success trend.
What exactly is forex education anyway? There are tones of free and paid material on the net and offline. Start reading ebooks, join the forums, talk to other traders, sign up for online webinars, seminars, trading courses and even get a professional forex mentor. Whether you should get a paid assistance is entirely up to you. Overall, it is possible to do it on your own, however this way requires a lot more time, patience and understanding towards mistakes being made.
Once you know what trading is all about, here are some other tips to help you move on:
- Learn all there is about fore trading and technical indicators – You cannot expect to be a successful Forex trader if you don’t dedicate time to learning about the Forex markets and how to trade them.
- Choose the Right Broker and trading platform -Don’t just settle for the first Forex broker you find online. Set some time aside to research different brokers, read their reviews and ensure that you choose the right one for you and your trading style. Invest time in searching for the right forex broker and good trading platform. If you want to succeed in forex, it is important to find reliable trading platform. What kind of platform and broker you choose depends highly on your own trading style. Figure out what kind of a trader you are, what is your investment capital and what are your objectives in forex. Some platforms are more use-friendly then others, some are web-based while others are download, some have hidden trading fees while others charge for each withdrawal, some require a deposit of at least $500 while others offer mini accounts with $1 deposit requirement. To summarize, do the research and find whatever is best for you!
- Never invest more than you can afford to lose – Don’t be tempted to jump straight in with big money trades, but instead, start with small position sizes and build upwards from there, being sure to take your time doing so.
- Develop forex strategy to fit your trading style and practice it via demo account. If your strategy is proven to be successful for several weeks over demo account, you can switch to mini accounts.
- Keep journal of your trades and emotions involved. In order to control the emotions, it is important to identify them and what is a trigger. A good trading diary will record details about all your trades, regardless of whether they resulted in a win or loss.
- Don’t count each trade. Some trades are winners and some losses. You have to look at the big picture instead of focusing on every trade separately. After all, if after couple of months you made profits, you are doing everything right!
- Always use stop/loss. A stop-loss is a tool which allows you to instruct your broker to automatically close a trade once the price hits a certain level. By using a well-placed stop-loss, traders can minimise the risk of losing all their money on a bad trade if the market moves against them.
- Never enter a trade with fear or greed. If you are not sure about a particular trade, don’t enter it. This chance might pass you by, but don’t you worry. There is ALWAYS another profit possibility right around the corner. Reduce your stress levels by finding the cause of your stress and either removing it or reducing its impact on you. This is easier said than done, especially after a spell of losses, but it can prove to be the difference between a successful trader and an unsuccessful one. Stay away from overtrading, revenge trading, greed trading, sloppy trading etc.
- Double check everything before you make an order. Sometimes the time is right, but you mix up and press on the wrong button! Clumsy fingers happen to everyone once in a while!
- Don’t try to copy others. Every trader is different and therefore it is crucial for you to create your own trading plan based on your own trading style.
- Be very careful when it comes to leverage. Understand the consequences of using high leverage with small funds account.
- If you are a beginner in forex trading, leave news releases alone for now. Trading news is a very difficult task and is avoided by many traders. The market is extremely unpredictable whenever a big news release comes out. You can win big, but you can also clean up your whole account within seconds.
- Discipline yourself. Stick to your trading system, no matter what.
- Learn charts and mapping. Even if your forex broker supply you with a charting platform, it is important to understand the charts and be able to interpret them.
- Determine Entry and Exit Points. Many traders get confused by conflicting information that occurs when looking at charts in different timeframes. What shows up as a buying opportunity on a weekly chart could show up as a sell signal on an intraday chart. Therefore, if you are taking your basic trading direction from a weekly chart and using a daily chart to time entry, be sure to synchronize the two. In other words, if the weekly chart is giving you a buy signal, wait until the daily chart also confirms a buy signal. Keep your timing in sync.
- If you’re losing money, take a break. When you start to lose money consistently and nothing seems to be going right, take time out. A monthly float to use as your trading capital is a good idea, because if that float runs out, you should stop trading for the month. Take the time to clear your head and start afresh the following month. Resist the temptation to try and make back lost money by ‘chasing the market’.
- Check Asset Correlations. Correlations in assets can help you identify good trades when used to your advantage. A correlation is a statistical relationship between two assets. For example, the Canadian dollar tends to be positively correlated with oil prices. That means they often move together. A negative correlation means the assets tend to move in opposite directions. A good example of this is the U.S. dollar and gold.
- Knowing about these correlations, understanding their impact on your trading, and using them to your advantage can give you the edge you need to become more successful as a trader.
- Don’t jump around from one idea to another. Just because your strategy isn’t working right doesn’t mean that you should start looking for a new one. There is no need to jump from one system to another. Stick to one trading strategy and learn to trade with it well. Improve it, backtest it and work it inside out until you can believe in it 100%.
- NEVER STOP LEARNING- CONTINUOUS EDUCATION. Trading the financial markets and forex is an ever changing and evolving environment. Each and every day that you trade there are lessons to be learned. You must keep continuously to succeed at trading forex. Successful traders not only study the charts and current market news, but they educate themselves via insightful webinars, online courses, videos, books, and more. You must study and practice and then study some more, as there is always something new to learn or improve at.
Forex Trading Tips – Final Thoughts
Remember, Forex success is based on a mixture of preparation and stubbornness, and takes consistent discipline to yield success. These Forex tips will help you prepare but the rest is up to you!
Here is a bonus trading tip for you, and perhaps one of the most important, the most successful traders are successful because they practise. Continued trading practise is the only way you will have a chance of achieving successful results. Fortunately for you, with a free and easy to use demo account, you don’t have to lose money whilst learning the basics.