Categories
Beginners Forex Education Forex Basics

Five Great Habits for Beginner Traders to Practice

Like with anything we do, traders can choose to practice good habits that help improve their results, or they can succumb to bad habits that will work against them. In trading, some bad habits can revolve around laziness, for example, no longer using your trading journal. Other bad habits like revenge trading or overtrading can wreak havoc on your trading account. If you want to avoid bad habits while practicing good habits that will improve your balance, take a look at the 5 good trading habits we’ve listed below.

Habit #1: Prepare Beforehand

Before you even think of getting started, you should have a detailed trading plan and strategy picked out so that you know why and when you’ll trade. With these handy, you’ll know that you’re making decisions based on your comprehensive plan, rather than only playing chance. This can also help you to avoid falling victim to some common psychology-related trading issues as well as making self-biased trading decisions. In addition, you’ll want to put some more time into preparing by checking charts and economic events, keeping up with the news, researching important topics, and so on. It will only cost you a little time to have the peace of mind that you are well prepared to start each trading day. 

Habit #2: Use Stop Losses

If you think that you’re never going to have a losing trade, then you thought wrong. Even the greatest traders of all time have had a bad day along the way, so don’t make the mistake of thinking that you don’t need to set a stop loss. Stop losses can be widened, tightened, and adjusted to ensure to take more control of the amount that you can lose on each trade. Of course, you’ll enter each trade with confidence, but setting a stop loss simply ensures that you’re protecting yourself from losing too much money if the market moves against you. Traders that skip this step in the beginning usually learn the hard way once they lose a lot on one trade or blow their account. 

Habit #3: Devote a Specific Time to Trading Each Day

You don’t have to sit in front of your computer 24 hours a day, but you should set aside a certain timeframe each day that’s just for trading. During this trading window, you can cut out all distractions, including background noise. This good habit is extra beneficial if you trade during your most productive daily window, as some of us are more productive first thing in the morning, while others can think more clearly around lunchtime or into the afternoon. You can also avoid feeling burnt-out by ensuring that your trading window isn’t too time-demanding. 

Habit #4: Keep a Journal!

How will you know what’s going right or wrong if you don’t keep up with your trades? Sure, you might have a general idea of whether you’re making money or losing it, but a trading journal can tell you so much more than that. If you want to be able to pinpoint problems, see where you’re making improvements, know where your strategy is working perfectly, and so on, trust us – you need to keep a trading journal. Sadly, some traders begin with one but stop using it after some time, either from laziness or because they become confident that they don’t need it anymore. 

Habit #5: Figure Out What Works for YOU

There are a lot of different strategies out there and it’s easy to get swept away in thinking that one that has worked for a colleague will work just as well for you. This doesn’t mean you shouldn’t take advice from other experienced traders, only that you should realize that your trading style may be completely different from someone else’s. There are enough strategies out there that you can avoid choosing one that’s too difficult or confusing, that requires more time than you have, that doesn’t work with your schedule, etc. Instead, spend the time searching for a plan that will work for you perfectly and feel that unnecessary stress melt away.   

 

Categories
Beginners Forex Education Forex Basics

A Quick Introduction to Forex Trading

Forex trading has a lot of appeal – you get to work from home, set your own hours, and be your own boss. There’s a lot of information on the internet about trading, from the mechanics behind it to trading strategies, tips and tricks, and warnings about what not to do. All of this can certainly be overwhelming for beginners that would like to get involved with trading but don’t know where to start. 

One of the first questions you might ask yourself is “what exactly is forex trading?” or “what makes forex trading unique?” Forex is short for “Foreign Exchange” and it revolves around trading currencies against each other. The US dollar is one of the major currency pairs you’ll see traded against other currencies like the British Pound (GBP), Canadian Dollar (CAD), Australian Dollar (AUD), or others. Traders must decide whether the price will go up or down and the goal is to profit from the difference.  

One of the main reasons so many people choose to trade forex is because it is very liquid. Liquidity means that there is a lot of price movement that provides traders with many opportunities to buy or sell. People also get involved with forex trading because the market doesn’t close, and they can set their own hours. You get to be your own boss, don’t have to worry about government tax cuts, and you can essentially work from anywhere if you have a laptop, phone, or tablet. 

To get started trading, you need to find a broker and open a trading account. The broker gives you access to the market through a trading platform so that you can trade. MT4 is the most common platform and it can be accessed through your web browser, mobile apps, or with a desktop application. Before you open an account with a broker, be sure to do thorough research about the company and read through their terms and conditions. Opening an account that comes with high trading costs and fees can quickly become a costly mistake. 

Although the benefits of trading are attractive, there are some cons as well. First, profit is never guaranteed. It is always possible that you will lose your investment. You must have a good education in forex trading before you get started, but many beginners simply don’t understand how much time you will need to put into learning. They open a live account too soon and become overwhelmed. Figuring out when to make trades can also get complicated. There’s a lot that goes into those decisions, including fundamental analysis, which involves making decisions based on the news, and technical analysis, which is based on data and charts that can be analyzed. Then you should consider a trading strategy, risk-management precautions to minimize your losses, and so on. 

Making an initial investment is another factor that turns many hopeful beginners away. Many of us don’t have thousands of dollars sitting in the bank, and if we do, the thought of investing that money with the potential to lose it all can be sickening. There is a compromise here in that many brokers will allow you to open an account with somewhere between $5 and $100, so you aren’t risking your life savings. However, the downside to making a smaller investment is that you will never make the same amount of profits as someone that has invested around $30,000 or more. Investing $5 will not be enough to keep you afloat and it certainly wouldn’t be able to support someone that preferred to quit their job in favor of becoming a forex trader. Of course, you could always start small to see if you’re good at it and then make larger investments later. 

If you’re looking to start forex trading, you’re off to a good start – reading articles like this one and doing research online is the first step. Things can go into much more detail than our introduction, however, so be sure to keep doing research online to find out more. Start with forex beginner information and later move on to more complicated categories like strategies and psychology. Hopefully, our article has helped to outline what forex trading is and to help one decide if trading is something they would be interested in.