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 bechallenging for beginners. While there are plenty of opportunities to makemoney, there are also risks that need tobe mitigated. The volatility of the forex market and the nature of onlinetrading 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 whyexperienced traders always use the services of regulated brokers. Regulatedbrokers offer the best trading experience and allowyou to profit from foreign currency pairs without additional risks. They arealso more affordable and have a clear pricing structure that you can reviewbefore 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 absorbingunnecessary risks is giving the trading platform – and the broker – a trybefore investing your real money into the market. There are demo accounts youcan open with every broker on the market. The purpose of these demo accounts isgiving you the opportunity to trade in a live market without any risk.
Rather than using the demo account to playaround, you can actually use it to gain insights on the trading experienceoffered by a broker. Set the demo account margin to the amount you plan todeposit into your real account and begin testing your trading strategies andtactics.
Since you are not trading with real money,you cannot bank real profits. That said, you can spend a couple of weekstesting different trading approaches and gaining real experience in the market.This gives you the opportunity to learnfrom your profits and losses, preparing you for real trades even more.
Leave Emotions Out
Trading emotionally is one of the biggestmistakes you can make as a beginner. Unfortunately, it is also recognised as the most common mistake to make. When you trade emotionally, you arebound to make the wrong decisions and lose a portion of your margin along theway.
I’m not just talking about chasing yourlosses either. Banking big profits can put you in tilt, which will then lead toyou opening more positions without realizing that the market has changeddirection. The result is usually that big profit you just banked gettingcompletely wiped out.
Chasing losses is even worse when you don’tkeep your emotions in check. You keep opening positions hoping for the marketto turn, only to find yourself losing more of your trading capital. Losses alsolead 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, thehealthier your risk profile will be. Entering the market blindly and hoping forthe best is not how you make money in the forex market. You need to invest ininformation (i.e. news, financial announcements, etc.) and the right tradingindicators 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 quickreflexes to open a position, for example, you can set a target price for theposition, determine the target profit based on your strategy, and limit yourloss with an SL in place.
Instead of trading without an SL, learn touse trailing stops to your advantage. You have to keep the trading platformopen in order for the trailing stops to be enforced, but that’s a small priceto pay when you consider how much a trailing stop can limityour risks in a volatile market.
The forex market doesn’t have to beconfusing. There are a lot of resources to help you learn about forex trading.