Forex trading always fascinates people around the world due to potentially high profitability together with a low level of risk and a small investment. However, people are often carried away with the information available on the internet, assuming that the forex trading is like a piece of cake. The reality obviously differs, trading may not be as easy as it is generally perceived.
If you are a beginner and wish to invest in the forex market, I would like to suggest first gain some experience by learning it from a professional trader or companies offering coaching classes and mentorship sessions. Let me recall, when I was a beginner and started trading forex, I even didn’t know the basic terminologies commonly used in forex. In this piece, I would like to share some tips I wish somebody had shared with me that time when I joined the forex industry. Anyhow, without wasting any time, let me list down some very effective tips to be successful in forex trading as a beginner.
10. Learn & Develop Your Understanding about Forex Trading – Don’t Rush!
Go slowly, don’t rush into learning the basics of forex trading. Try to develop an understanding on how the forex market works. Learn different trading strategies and make yourself familiar with various terminologies used in forex trading. Often novice traders tend to start trading right away without having the basic knowledge of forex market which is a wrong attitude and should be avoided, Forex market is considered highly volatile and you can easily lose your investment in no time.
9. Avoid Frequent Change in Trading Strategies
Here I would like to point out a very common mistake that I noticed in many newcomers that they tend to keep changing their trading strategies. I simply cannot relate this act to any rationale. This should not be an approach. Try sticking to one trading strategy until or unless you master it. It doesn’t matter whether you lose or win by deploying the same strategy over and again. The point is to know your weaknesses and strengths. If you keep changing your trading strategies continuously, how on earth can you know what went wrong, and what needs to be rectified?
8. Control Your Emotions
Emotions play a vital role in trader’s success. It is quite normal for a beginner to become very excited by winning one or two trades in a row, however, you are not supposed to be overwhelmed. Try controlling your emotions and just focus on the charts. Don’t get carried away, the best way to control your emotions is to keep yourself from acting promptly. Hold your breath and calm your nerves down. You can also seek professional guidance from a mentor. You can approach me as well, I will try my level best to teach everything that is deemed necessary for a novice trader. I would suggest, follow my instructions from scratch, and stick to them, I bet you wouldn’t be ashamed of yourself while trading forex ever.
7. Stay Calm, Have Control on your Nerves
Often trades just go freaking out if something happens against their expectations. This is normal, however, you must not lose your senses. Trading involves ups and downs, sometimes you win sometimes you lose, this is part of forex trading. What you need to do is to remain patient, try to analyze what made your enter a wrong trade. Learn from your mistake and avoid repeating it in the future. Believe me, a lesson learned is a lesson earned and you could well be on your way making far more profits than what you lost earlier.
Alternatively, you can also define stop loss to limit your loss in a way that when the market moves rapidly affecting the price of assets adversely, you can only lose the amount until the stop loss level is reached. This prevents your account from going into a negative balance.
6. Follow Price Action Strategy
In earlier days, when computers were not common, people used to trade forex manually using telephonic calls and registers. You might wonder, how would have they managed to earn profits when there was not trading tools available to take help from. Let me make it clear. They used to read price charts, a big board posted with price movements to analyze and interpret the prospected move in the price of an underlying asset. This is known as price action strategy. It’s been there for so long and being practiced since the Japanese developed candlestick patterns.
You don’t have to worry about learning price action strategy, I have already worked it out for you. There is no need to go after looking at various complex graphs and trading tools creating all the mess. All you need is to follow my price action strategy and you could well be earning fine.
5. Expect Realistic Returns
Sadly speaking, I’ve seen people complaining that they do not make enough money which they once expected with forex trading. Why is it so? Because they might have expected unrealistically. Forex trading is just like another form of investment that has the potential to bring you relatively quick returns but that doesn’t mean that you are going to become a millionaire overnight. Always be sensible, think realistically and keep trying your fate, work hard learning different tips and tricks and soon you’ll be on your way making handsome profits.
4. Avoid Overtrading
You may have heard a common saying “slow and steady wins the race” the saying perfectly fits the forex trading scenario. You are not supposed to rush trading all the day along. Forex market is highly volatile and chances to have profitable trades become less when the market tends to move fast. Too much trading would definitely lead you to commit foolish mistakes.
3. Learn & Master Daily Charts
You need to learn first how to read daily charts and then try to become proficient enough to understand the charting language. Daily charts are considered to be one of the best sources to reflect possible implications to the price of underlying assets. It’s better to develop a sound understanding with the charting tool.
2. Avoid Defining Stop Loss too Close
To trade safely, often traders put a stop loss to limit their loss. However, there have been several cases where a possible profit goes unattended because of putting a stop loss too close. Sometimes, the market starts moving against you but after reaching a certain level it turns back making your trade profitable. If you define a stop loss too earlier then your position is going to be closed as soon as the stop loss level is reached and therefore there is no way that you can make a profit once a position is closed. I’ve tried explaining how to put a stop loss in some of my articles, you can read them on this website.
1. Don’t Get Into Forex Trading Without Having Some Basic Knowledge
As mentioned above, forex trading needs you to have a lot of market knowledge and experience before you actually start trading. However, sometimes people take forex trading for granted and jumps in having no previous experience. Resultantly, they go liquidated in all of a sudden or run away, quitting forex trading forever. Therefore, I always suggest gaining some experience prior to investing your money in the forex market.