Important tips for a beginner in forex trading
Ease of entry in the forex market has made it very easy for anyone to become a forex trader. However, to become a successful trader requires more than just a trading capital.
Below are the 10 simple yet basic tips, if followed together, can greatly increase your odds of becoming successful in the forex market.
1. Education is fundamental to trading success. Focussing more on learning each day and less on the money to be made is crucial for long term success. Study different pairs, understand what makes their prices go up and down, learn to utilise each and every market situation whether it comes in the form of fundamental news or price action.
2. There is an old market adage, that is, “ failing to plan is planning to fail”. It clearly summarises the importance of a well organised trading plan. By using a trading plan, you’ll be able to head in the right direction and execute all the rules that you’ve made rationally based on your market analysis before entering the trade.
3. Once you’ve made your trading plan, it’s important to test it on a demo account. It will allow you to realise what works and what doesn’t in the real-market conditions.
4. Choosing the right broker for yourself is also of utmost importance. Therefore, spend some time comparing a lot of brokers and make sure the broker that you are choosing is suitable for the strategy you want to use. No matter how many happy clients a broker has, if they don’t fulfil your needs, they can never be useful for you. Some tried and tested beginner friendly brokers who also offer micro accounts are:
5. Another critical component that every new trader should keep in mind before using real cash is never risk more than you can afford to lose. Losing money is already disappointing and if you lose the money that you’ve saved for paying bills or something very important, the experience can be really traumatic.
6. One irreplaceable rule for trading is following a sound money and risk management plan. The best way is to use a stop loss as it ensures that your losses and risks are limited to a certain level.
7. New traders are guilty of entering or exiting the positions too early or too late. All of this is because they can’t keep a check on their trading emotions. Always remember that emotions can be poisonous in trading.
8. An effective trader is the one who makes rules and also follows them. Don’t let the market trick you in abandoning your trading discipline. Be patient and act wisely when the opportunity arises and never keep regretting the lost opportunities because opportunities in the market are like trains. When one leaves the station, the other arrives.
9. Beginners should also work on their habit of keeping a trading journal because the only best teacher is your past mistakes.
10. Know that, even if you are doing everything in your control, your trading will not be all good every time. You’ll have to face peaks and valleys in your trading career. It shouldn’t disappoint you, instead encourage you to stay in the game and bounce back even stronger.
While it is true that the forex market offers abundant opportunities to make wealth, it should be remembered that it comes with its fair share of risk. Therefore, always follow these rules for best results.
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