Forex Trading Tips for Beginners
As a beginning forex trader, you can easily get lost, confused or overwhelmed with all the information available to you about trading.
The following forex trading tips are what we believe you should focus on to become a successful trader.
The most important trading tips for a beginning (or any) trader to absorb before getting started in the market.
Learn the basics first
Many beginning traders try jumping right into the market with no real background knowledge of their trading markets. To build a solid trading foundation, you need to take the time to learn about how the Forex market works (or any market you’re trading) and really get a solid understanding of all the jargon, etc. before you actually dive in and start learning a trading strategy.
Learn one trading strategy, stick with it.
One of the biggest mistakes beginning traders makes changing trading methods too often. If you are using a trading method, you need to really learn it and master it before you do anything else. If you skip from trading strategy to trading strategy, you will never master any strategy.
Just don’t switch Strategies because you had a few losing trades. Any method and trading strategy will have a certain amount of losing trades; this is normal and part of trading. You cannot let losing trades affect you too much.
Don’t get overwhelmed.
It’s easy to feel overwhelmed with information and trading strategies as a beginning trader. Aim to learn from only a few sources and practice. Block out all the other noise and people that state you will only loose.
Don’t freak out when a trade move against you.
This one is big, because most traders, especially beginners, freak out or over-react at the first sign of a trade moving against them. This is much more of a problem in live trading than demo trading, due to the differences in emotion.
A trade moving against you is NORMAL. You can have Trades that move within 5 pips of your stop loss and go on to be HUGE winners after that. If you closed them out too early before they hit my stop loss, you would have lost money and lost a lot of profit.
This is the main reason why you need to let your trades play out and not close them out early ONLY because they’ve moved against you.
Set your stop loss in a logical/safe place, manage your position size so that your risk is at a level you’re OK with losing, and LET THE TRADE GO.
Don’t micro-manage your trades; just let the market do the work.
Perhaps the hardest but most important thing for a new trader to do is to be realistic. Know that you aren’t going to be able to quit your job and go work from a beach with a $2,000 trading account. It takes time and investment (the learning curve cost money like any education you pay to build a career or become successful).
Being grounded and realistic is what will keep you on the path to trading success. If you start greedy, you’re going to over-leverage (risk too much) and over trade your account and lose money instead of making a lot of money.
Don’t put stop losses too close.
You have to place your stop losses at a ‘safe’ distance away from your entry price. If you place them too close, you will get stopped out for a loss before the market really had a chance to move in your favour. In other words, your trade idea may have been right, but because you placed your stop loss too close, you got stopped out before the move you were anticipating occurred.
Risk Only What You Can Afford to Lose
Before you start using real funds, you have to make sure that all of the money in that trading account is truly expendable. If it's not, you should keep saving until it is.
Losing money is traumatic enough. It is even more so if it is capital that should have never been risked in the first place. Our interest is in keeping you a happy trader; this will be hard if you blow away your funds in a few trades.
Understanding the importance of each of these trading will be by no means the secret to success, but they will help you deal with the process and set you up for becoming a profitable trader over time. Trading is hard, and traders who have the discipline and patience to learn can increase their success odds in a very competitive arena.