One of the most valuable Forex Trading Tips trading the Forex markets is also one of the simplest; understanding key resistance and support levels in the market you have chosen. Don’t let Forex currency scare you off. Sometimes it will feel like the odds are against you but, try to remember that Forex success is based on a mixture of preparations and plans.
What is Forex Trading?
Forex is a combination of foreign currency and exchange. Foreign exchange is the process of changing one currency into another currency for a vast variety of reasons, including:
Forex, or foreign exchange, is explained as a network of buyers and sellers, who transfers currency between each other at an agreed price. By doing this individuals, companies and central banks convert one currency into another. While a lot of foreign exchange is done for practical purposes, the vast majority of currency conversion is undertaken with the aim of earning a profit.
The Best Forex trading tips are:
Learning how to trade Forex can be a complicated process for beginners. Most people have a dream of getting rich overnight, which may turn out exactly as unrealistic as it sounds. The world of Forex trading can be overwhelming, especially when you are new to the game, and don’t know or understand the rules as yet. There are a lot of figures in regards to how many traders successfully make money and how many traders occur a loss of money. The most common figure seems to be that 90% of traders occur a loss of money, and only 10% of traders are consistently profitable. What is it that these 10% are doing that put them in this league?
First you will need:
- A quick wit
- The ability to work and keep calm under stress
- The courage to take risks
- Persistence a
- The ability to make quick decisions
- Have clear goals in mind, that ensure your trading method is capable of achieving the goals you set for yourself.
1. Know yourself
Firstly, define your risk tolerance very carefully and understand your own needs.
To profit in trading, you must recognize the markets – but first know and recognize yourself. The first step of gaining self-awareness is ensuring that your risk tolerance and capital allocation to forex and trading are not unnecessary, unwarranted or lacking. What this means is that you must very carefully study and analyse your own financial goals when engaging in forex trading before taking any other steps.
Top Tip! While stock markets and commercial bank deposits are in deep depressions during a crisis, Forex profits are still able to be made, because any change in currency can be used to make profit. A falling market is as profitable for Forex trading as a developing one.
2. Define Goals and Trading Style
Before you start, it is imperative to have some idea of your end destination and how you intend to get there.
Each trading style carries a different risk profile, which in turn requires a certain approach to be successful.
Top Tip! All you need to start making money is a computer or a smart phone and an Internet connection.
3. Choose a Broker Wisely
Choosing the right broker is half the battle won so make sure you take your time on checking and rechecking reviews and recommendations to ensure that your chosen broker is trustworthy, and suits your individual trading personality.
Always be aware that there are fake brokers out there! An authorised broker will always have a licence.
4. How to choose the right trading platform?
There are many companies that offer Forex services, and without the knowledge of the essential criteria, it’s easy to get confused and end up with an unreliable service provider.
Evaluate the popularity of the platform provider
Evaluate how easy and convenient it is to use the platform, including analytical options and extra tools
The commission payments for transactions are described by the Spread. The bigger it is, the more you will have to pay the service provider
The best platforms provide the opportunity to use Internet-banks, credit cards or online payment operators
5. Create Your Own Strategy
Strategies, Strategize, go!
A very common mistakes with beginners are not creating an action plan.
- Figure out what you want to get out of trading
- Have a clear goal in mind.
- Include your profit goals
- Include risk tolerance level
- Include methodology and evaluation criteria
Once a plan is in place, simply make sure each considered trade falls within this plan’s parameters.
Top Tip! Unlike other finance markets, Forex doesn’t need all your savings to take part. There are good and reliable platforms with minimal deposits of as little as $25!
Test your plan in real market conditions with a risk-free FOREX.com practice account. This will give you a chance to see what it’s like to trade currency pairs and test drive your plan without risking any capital just yet!
7. Learn Step-by-Step
As with all new practical learning activities, trading requires you to start with the basics, step by step, until the playing field is fully understood. Start with small investments.
8. Take Control of Your Emotions
Don’t get carried away. It can be difficult at times, especially when a loss is experienced but -keeping a rational, level head is key.
When emotions get the better of you = expose yourself to unnecessary risks.
Did you know? Unlike stock markets with tens of thousands of different shares, Forex works with 8 basic currencies which are the centre of most trades.
9. Stress Less
Obvious but true! Trading under stress generally leads to irrational decisions, and in a live trading situation this will most certainly cost you money.
Identify the source of your stress and try to eliminate it
Take a deep breath and focus
10. Practice Makes Perfect
This is the most important tip we can really give anyone! Remember – It is very unlikely to succeed at anything on your first go at it.
Constant trading practice = yield consistently top results.
11. Psychology is Key
When planning a next move, analyse market movements and review your own psychology. You need to ask yourself the following questions:
- Did I show signs of confirmation bias?
- Did I make a trade out of frustration?
- What made me choose that particular currency pair?
- Mastering your psychology will protect you from many losses along the trading development path.
12. No Risk, No Success
Not even the top 100 Forex trading tips and tricks will guarantee you success.
Accepted the possibility of failure
You won’t make profitable trades 100% of the time
Don’t let false advertisements get in your head, either
Be realistic about your Forex trading methods and goals.
13. Stay Patient
Success is never instantaneous, easy or a fast path to profit. Stay Patient!
14. Continuous Education
Each new day of trading, will bring a new lesson to be learned.
Look closely at the Forex market and keep all the tips you have learnt in mind.
Analyse news, trends, and financial processes, and Forex basics.
Study, then practise and then study some more.
Repeat this process!
Studying does require a lot of time and effort, but it does pay off in the long run.
15. Take a Break
Take a “time-out” from your computer, especially during stressful trading sessions. Several open computer windows and multiple data streams to analyse, will created pressure!
16. Follow the Trends!
Learn about trends as the ability to spot trends is a valuable one.
- Show traders what is coming
- Allow you to pro-actively adjust your trading
- React in a reasonable amount of time
17. Seek Competitive Conditions
It is very important to choose top-notch service conditions and get favourable spreads.
18. Plan in Advance
Forex trading is not a “lotto gamble” – it is a strategic game.
Carefully calculate moves before action is taken.
Formulating a plan by answering the following questions:
Have I accounted for the possibility that I may lose?
What’s my plan B for the different types of scenarios that may arise?
To be successful at Forex trading, you have to expect the unexpected.
19. Know the Charts
Trading will take place on many different markets and you will need to quickly understand the information to analyse for each trade. Yes, there are numerous tools available to traders but the most time-efficient of these is charts.
Numerically-heavy data in the form of a simple visual.
20. Don’t Run out of Chances
Eagerness is good, but know your limits. Too much trading my harm your chances of achieving success.
Why? Overtrading usually leads to weakened focus and careless trades.
21. Greediness can make you take unnecessary risks as well.
Greediness Leads to Risks so set the maximum loss and desired profit within your trading plan. When you hit this level, stop!
Always focus on fund management.
22. Use Stop-Losses
A very valuable tool is stop-loss. A stop-loss is especially beneficial when you don’t have the ability to close positions manually.
23. Analyse Your Trades
Keeping a journal of your trading activity is a great idea. This will help you monitor your performance and find patterns within your own trading.
- Learn from past mistakes
- Improves your discipline.
- Write down everything and be honest.
- Be your own biggest critic.
Be willing to try new things and aim to improve your trading. The markets are constantly evolving and so should you.
25. Focus and Small Losses
Remember your money is at risk, so make sure it is not needed for regular living expenses but rather ‘vacation money’. Once the vacation is over, your money is spent. This attitude toward trading will psychologically prepare you to accept small losses.
26. Positive Feedback Loops
A positive feedback loop is created as a result of a well-executed trade in accordance with your plan.
Plan a trade and execute it well = form a positive feedback pattern.
Success breeds success, which in turn breeds confidence, and even if you take a small loss in accordance with a planned trade, you will be building a positive feedback loop.
27. Perform Weekend Analysis
On the weekend markets are closed, so takes this time to study weekly charts for patterns or news that could affect your trade positively.
Keep a Printed Record
A printed record is a great learning tool. Print out a chart and list all the reasons for the trade, including the fundamentals, entry and exit points. Make any relevant comments on the chart, including emotional reasons for taking action.
Traders who are passionate about what they do are often the best in doing it. Remember –
- Do not overtrade.
- Risk small amounts of your account.
- Do not stare at your screen the whole day long. staring at a chart won’t make it go in your favour.
- Take breaks from time to time, if necessary.
- Do all you can to become profitable.
Because currencies move in relatively stable increments outside of major events, when they begin to reach historic levels, either to the upside or downside, it can give traders pause for thought. Success will come! Create a favourable balance between hard work, sound judgment and patience and don’t give up after a few losing trades!