The best Forex trading tips for beginners

With online trading becoming more accessible, more investors are switching to forex trading as a way to expand their portfolios. Beginners and expert traders alike are looking at the financial markets – the forex market in particular – as being lucrative enough to enter thanks to the wealth of opportunities they offer.

The forex market, however, can be challenging for beginners. While there are plenty of opportunities to make money, there are also risks that need to be mitigated. The volatility of the forex market and the nature of online trading itself are parts of the challenges. If you are new to forex trading, these next few tips and tricks will help you conquer the market.

Stick with Regulated Brokers

Not too long ago, we took a closer look at why experienced traders always use the services of regulated brokers. Regulated brokers offer the best trading experience and allow you to profit from foreign currency pairs without additional risks. They are also more affordable and have a clear pricing structure that you can review before opening an account.

The challenge now is finding a good broker to engage, but this too is an easy one to overcome thanks to sites like InvestinGoal.com. The site is filled with objective reviews of online brokers, including the best forex and CFD brokers on the market. The way InvestinGoal structures its reviews really helps new traders understand the brokers they want to engage. We recently discovered that XM offers a commission-free trading environment, uses the latest MT5 as the trading platform of choice, and lets traders open an account with as little as $5 from reading the review of the broker XM. You can find details like these about your brokers too.

Try Before You Trade

Another great way to avoid absorbing unnecessary risks is giving the trading platform – and the broker – a try before investing your real money into the market. There are demo accounts you can open with every broker on the market. The purpose of these demo accounts is giving you the opportunity to trade in a live market without any risk.

Rather than using the demo account to play around, you can actually use it to gain insights on the trading experience offered by a broker. Set the demo account margin to the amount you plan to deposit into your real account and begin testing your trading strategies and tactics.

Since you are not trading with real money, you cannot bank real profits. That said, you can spend a couple of weeks testing different trading approaches and gaining real experience in the market. This gives you the opportunity to learn from your profits and losses, preparing you for real trades even more.

Leave Emotions Out

Trading emotionally is one of the biggest mistakes you can make as a beginner. Unfortunately, it is also recognised as the most common mistake to make. When you trade emotionally, you are bound to make the wrong decisions and lose a portion of your margin along the way.

I’m not just talking about chasing your losses either. Banking big profits can put you in tilt, which will then lead to you opening more positions without realizing that the market has changed direction. The result is usually that big profit you just banked getting completely wiped out.

Chasing losses is even worse when you don’t keep your emotions in check. You keep opening positions hoping for the market to turn, only to find yourself losing more of your trading capital. Losses also lead to you losing the ability to use strategies like hedging to manage risks.

Maintain a Healthy Risk Profile

The more you know about the market, the healthier your risk profile will be. Entering the market blindly and hoping for the best is not how you make money in the forex market. You need to invest in information (i.e. news, financial announcements, etc.) and the right trading indicators to help you make calculated decisions every time.

To further strengthen your risk profile, you need to utilize tools such as Take Profit (TP), Stop Loss (SL), and action price. Rather than relying on your quick reflexes to open a position, for example, you can set a target price for the position, determine the target profit based on your strategy, and limit your loss with an SL in place.

Instead of trading without an SL, learn to use trailing stops to your advantage. You have to keep the trading platform open in order for the trailing stops to be enforced, but that’s a small price to pay when you consider how much a trailing stop can limit your risks in a volatile market.

The forex market doesn’t have to be confusing. There are a lot of resources to help you learn about forex trading.

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