Forex market has snatched away profits of thousands of traders. Most of the traders fail to earn money from Forex because they lack discipline and proper knowledge. Being a professional trader for last six years, I have 10 Forex market tips for beginners that will help you to stay afloat on the market.
1. Know Yourself and your know your risk appetite.
To become a profitable Forex trader, you must recognise the market. But before recognising the market you must know yourself as a trader. Because fear and greed are one of the most important factors that decide the success of a Forex trader or a stock trader. You must gain self self awareness and your risk tolerance.
2. Plan your goals, study hard and Do not deviate
Once you know what you want to achieve from trading start working on strategy or trading plan. You cannot earn if you don't learn. Therefore learning is very essential. You must study in detail about the market, how does Forex market functions, the volatility of the Forex market, the currency pairs, their behaviours and so on.
Initial days will be hard, but do not deviate and stick to the plan.
3. Broker selection
Generally beginners do not emphasise on Forex brokers or the best Forex broker that will suit them. Rather they simply dive into trading strategies and the perfect setup. They have no idea a good Forex broker is very essential for a trading career. They neglect questions like What kind of client profile does the Forex broker aim at reaching? Does the trading software suit your expectations? How efficient is customer service? Because in the long run your success on Forex trading will also depend on a good Forex broker with good customer service.
4. Choose your account type and leverage ratio wisely
It is very important for every beginner to choose a account type according to their expectations and knowledge level. Brokers usually have a wide range of accounts with shiny offers and leverages. But the thumb rule says lower leverage is better. Do remember to to learn about leverage before opening an account online because leverage is a two edged sword.
5. Start small and grow with your profit
One of the best tips for trading Forex is to begin with a small capital, and low leverage, while adding up to your account as it generates profits. For a beginner it will be disastrous to the idea that a larger account will allow greater profits. If you can increase the size of your account through your trading choices, perfect. If not, there’s no point in keeping pumping money to an account that is burning cash like an furnace burns paper.
6. Have favourites and focus on a 1-2 currency pair only
Keeping your eyes on too many currency pairs will make go crazy. Currency trading is deep and complicated, due to the chaotic nature of the markets, and the diverse characters and purposes of market participants. It is better to become master of one than being a spectator of many currencies.
7. Take notes. Study your success and fail trades
As a beginner in Forex trading, you will be having many questions about the market behaviour. It is very essential to know what went wrong if a trade goes against you. And on the other hand, if you do well also take a note and analyse your good trade. So that the ratio of your success trades are far greater than your losing trades.
8. Keep it simple
When you will be jumping into the world of charts and indicators. Don't complicate it by using dozens of indicators. Always remember 'Price is the King.' Don't overpopulate your computer screen by too many indicators. Keep it simple. If you want to learn about Forex trading like a pro, click here.
9. Risk Management
Perhaps risk management or money management is the most underrated topic in the world of Forex trading. But risk management is the most thing that should be taught to a Forex trading beginner. Beginner it is the risk management that keeps a trader afloat on the market. If you want to know about risk management and the importance of it. Click here.
10. Never tie yourself
One of the most common mistake by Forex traders is they set a strict target of earning a certain amount within a certain period of time. Example, trader john has set a target of earning $2000 every month. But the market is full of ups and downs. Market may not reward you equally all the time. If you fail to achieve $2000 in a certain month then you should not panic and push yourself too hard. If you start pushing yourself too hard. You will start losing money.