Tag: Forex Beginner

Categories
Forex Basics

Is It Safe (and Wise) to Trade Forex? Let’s Discuss…

The global Forex market has more than $5 trillion in daily trading volume, making it the largest financial market in the world. The popularity of Forex attracts traders at all levels, from novices learning about financial markets to more professional and experienced veterans. Because it is so easy to do Forex trading – with all-day […]

The global Forex market has more than $5 trillion in daily trading volume, making it the largest financial market in the world. The popularity of Forex attracts traders at all levels, from novices learning about financial markets to more professional and experienced veterans. Because it is so easy to do Forex trading – with all-day […]

The global Forex market has more than $5 trillion in daily trading volume, making it the largest financial market in the world. The popularity of Forex attracts traders at all levels, from novices learning about financial markets to more professional and experienced veterans. Because it is so easy to do Forex trading – with all-day sessions, access to high leverage, and relatively small costs – but it’s also very easy to lose when trading Forex. In this article, you will see 10 ways in which traders can avoid losing money in the competitive Forex market and can safely make Forex investments.

Do Your Homework

Just because it’s easy to get into the world of Forex doesn’t mean it’s easy to operate in this area. Learning about Forex is fundamental to a Trader’s success in foreign exchange markets. Although most of the learning comes from live trading and experience, a trader must learn everything possible about Forex markets, including geopolitical and economic factors that affect the currencies to be traded. The task is a continuous effort as traders need to be prepared to adapt to changing market conditions, regulations, and global events. Part of this research process involves the development of a trading plan.

Choose a Reputable Broker

The Forex industry has less oversight than other markets, so it is very likely to end up doing business with a reputable Forex broker. Because there is a concern about the security of deposits and the overall integrity of a broker, Forex traders must only open an account with a member company of the National Futures Association (NFA) and which is registered with the U.S. Commodity Futures Trading Commission (CFTC) as a futures commission merchant. Every country outside the United States has its own regulatory body with which legitimate Forex brokers must be registered.

This is basic and indispensable and cannot be emphasized further, only duly regulated Forex brokers should be traded. Traders should also investigate each broker’s account offers, including leverage amounts, commissions and spreads, initial deposits, and account withdrawal and financing policies. A representative of useful customer service should have all this information and be able to answer all questions regarding company services and policies.

Using a Practice Account

Almost all trading platforms have a demo account to practice, sometimes called a dummy account or demo account. These accounts allow traders to place hypothetical transactions without a funded account. Perhaps one of the most important benefits of a demo account is that it allows the trader to become an expert in order entry techniques.

Few things are as harmful to a real account (apart from the trader’s overconfidence) as pressing the erroneous button when opening or exiting a position. This is quite common, for example, for a new trader to accidentally add to a losing position rather than close the trade. Having many errors in order entry can lead to having large losses without protection. Apart from the devastating financial consequences, this situation is incredibly stressful. Practice makes perfect: experiment before placing real money online.

Keep the Graphics Clean

When a Forex trader has hired an account, it can be tempting to take advantage of all the benefits of technical analysis offered by the trading platform. Although most of these indicators are perfectly adapted to foreign exchange markets, it is very important to consider keeping analysis techniques to a minimum to be effective. The use of the same types of indicators-such as two volatility indicators or two oscillators, for example, can be redundant and may even give opposite signals. This must be avoided.

Any analysis technique that is not routinely used to improve the performance of the company must be removed from the table. In addition to the tools used for the chart, the overall appearance of the workspace should be considered. The colors, fonts, and types of price bars chosen (line, Japanese candle bar, distribution bar, etc.) should create an easy-to-read and interpret chart that allows the trader to respond more effectively to changing market conditions.

Protect Your Trading Account

While there is a lot of focus on making money in Forex trading, it is very important to know how to avoid losing balance in your account. The most appropriate techniques of monetary management are a very important part of successful negotiation. Many experienced traders would agree that anyone can enter a position at any price and still earn money – the important thing is how he leaves trade.

Part of this is knowing when to take your losses and move on. Using stop-loss protection is always an effective way to ensure that losses remain reasonable. Traders may also consider using a maximum amount of daily losses beyond which all positions would be closed and no new trading will start until the next trading session. While plans must be made to limit losses, it is equally essential to protect gains. Money management techniques, such as the use of stop drags, can help preserve profits.

Start Small

Once you’ve done your homework, spent time with a practice account, and have the Trading plan instead, it may be time to start live – that is, start trading with real money. No amount of trading in a demo account can accurately simulate actual trading, and as such, it is very important to start with a small amount when going live.

Factors such as emotions and slippage cannot be fully understood and accounted for until live trading is performed. In addition, a trading plan that was used as a champion in backtesting results or trading practice could, in fact, fail miserably when applied to a live trade. Starting small, the trader can evaluate your trading plan and emotions, and gain more practice in executing order entries – without risking the entire trading account in the process.

Use of Reasonable Leverage

Foreign exchange trading is unique in the amount of leverage offered to its participants. One of the reasons why Forex is such an attractive market is that traders have the chance to make high profits with a small investment – sometimes as little as 100 US dollars. Properly used, leverage provides growth potential; however, leverage can easily amplify losses. A trader can choose the amount of leverage he wants to use when basing the size of the position on the account balance. For example, if a trader has 20,000 USD in a Forex account, a position of 200,000 USD (two standard batches) would use leverage 1:10. While the merchant might open a larger trade if he were to take maximum leverage, a smaller position would limit the risk.

Leverage is you have a chance to use something small to control something bigger. In short, Forex trading means that you can have a small amount of balance in your account and be able to control a much larger amount in the market. In trading currencies, there is no interest charged on the margin used, and it doesn’t matter what kind of Trader it is or what kind of credit it has. If you have contracted an account and the broker offers the margin, you can trade on it.

The most obvious advantage of using leverage is that you can earn a significant amount of money using only a limited and small amount of capital. The problem is that, in the same way, you can also have a loss of a considerable amount of money in leverage trading. Everything depends on the prudence with which it is used and the conservativeness or aggressiveness of its risk management.

You have stricter control than you think; The advantage makes a pretty boring market incredibly exciting. Unfortunately, when your money’s on the line:

Exciting DOES not always = Good

But that’s exactly what leverage has brought to FX. If there was no leverage, traders would be surprised to see a 15% move in their account at a year. However, a trader who uses too much leverage can easily see 15% moving in his accounts in a day.

While typical leverage amounts tend to be too high, leverage trading five times more; it is very important for you to know that much of the volatility you experience when trading is mainly due to leverage of your Trade than the same movement in the underlying asset.

Amounts of Leverage Provided

Leverage usually occurs in a fixed amount that may vary depending on the broker. Each broker grants leverage based on its rules and regulations. The amounts are usually 1:50, 1:100, 1:200, and 1:400.

Leverage of 50:1 Percent

Leverage of fifty to one means that for every $1 you have in your account you can place a value of $50. For example, if you deposited $500, you could trade amounts up to $25,000 on the market using leverage 50:1. It’s not that you should trade the full $25,000, but you would have the ability to trade up to that amount.

Leverage 100:1 Percent

Leverage of a hundred to one means that for every $1 you have in your account, you can place a commercial value of $100. This is a standard amount of leverage suggested in a standard account. The typical minimum deposit of 1000 USD for a standard account would give you the ability to control 100,000 USD.

Leverage 200:1 Percent

A leverage of two hundred to one means that for every $1 you have in your account, you can place a value of $200. This is a frequent amount of leverage suggested in a mini lot account. The typical minimum deposit on that account is around 250 USD. With 250 USD you would be able to open operations up to the amount of 50,000 USD.

Leverage 400:1 Percent

A leverage of four hundred to one means that for every $1 you have in your account, you can place a value of $400. Some brokers offer 400:1 in mini-batch accounts. I would personally take care of any broker that offers this kind of leverage for a small account. Anyone who makes a $300 deposit into a Forex account and tries to trade 1:400 leverage could be wiped out in a matter of minutes. Not that Brokers force the Trader to deposit only $300, but if they make it possible, the suspect doesn’t?

Professional Traders and Leverage

For the most part, professional traders trade very low leverage. Having lower leverage has the ability to protect your balance when you do business mistakes and keeps your returns more consistent. Einstein once said that the definition of Madness is: “Always do the same and expect different results.” Without a business log and a meticulous log book, traders are likely to be able to continue making the same mistakes, minimizing the chances of being a profitable and successful trader in the future.

Understanding Tax Implications

It is very important to have clear tax implications and how it deals with the foreign exchange trading activity that will be prepared at the time of filing taxes. Consulting with a qualified specialist or tax specialist can be beneficial and help avoid surprises when paying taxes and can be great to help people take advantage of an existing diversity of tax laws. As tax rules often change, it is prudent to maintain a relationship with a trusted professional who can handle all tax-related matters.

Treat Trading Like a Business

It is very important to consider foreign exchange trading as a business and to keep in mind that gains and losses are not important in the short term. As such, the operators must avoid becoming overly emotional beings, no matter what the gain or loss, and treat each as one more day at the office. As with any other business, Forex trading incurs losses, expenses, taxes, risks, and uncertainty. Also, just as small businesses rarely succeed overnight, so it is for the vast majority of currency traders. Planning, setting realistic goals, being organized, and learning from both successes and failures are key to achieving a long and successful career as a foreign exchange trader.

In Conclusion

Forex trading around the world is attractive to many traders because of their low account requirements, 24-hour trading, and access to large amounts of leverage. When approached as a business, foreign exchange trading can be profitable and rewarding. In short, traders can avoid losing money in currencies and make a safe Forex trading, as long as they:

  • Are well prepared
  • Have the patience and discipline to study and investigate
  • Apply money management techniques
  • They resemble their trading activity as if they were running a business
Categories
Forex Basics

Follow Top Trader Advice When Getting Started in Forex

Starting the forex journey has a reason, so you first need to know what you want out of trading once you are familiar with the basics. It is not always about the money, some people like the thrill of trading, however, if you want to have some income out of forex forget about getting emotional. The great thing about forex trading is that it is very flexible for you. You can shape trading how you like it, trade only 10 minutes a day, explore an incredible array of methods possible, and use your knowledge how you see fit.

Starting the forex journey has a reason, so you first need to know what you want out of trading once you are familiar with the basics. It is not always about the money, some people like the thrill of trading, however, if you want to have some income out of forex forget about getting emotional. The great thing about forex trading is that it is very flexible for you. You can shape trading how you like it, trade only 10 minutes a day, explore an incredible array of methods possible, and use your knowledge how you see fit.

Starting the forex journey has a reason, so you first need to know what you want out of trading once you are familiar with the basics. It is not always about the money, some people like the thrill of trading, however, if you want to have some income out of forex forget about getting emotional. The great thing about forex trading is that it is very flexible for you. You can shape trading how you like it, trade only 10 minutes a day, explore an incredible array of methods possible, and use your knowledge how you see fit.

Now we have mentioned a broad spectrum, when you have so many possibilities people start wondering if they have made the right choice. Eventually, your trading will become a result of what you like but also evolve as you develop the skill and discipline. The right path to consistent results is very hard, that is why most fail. But it is not hard to learn to trade, it is hard to fight with the emotions and urges trading will put on you many times. Therefore, we have made a few steps that will put you on the right track, getting started is a crucial moment that will direct you for some time. Sometimes it may take a while to understand that a particular trading method is not for you, but this is ok, successful traders fail and keep trying. 

Treat Trading Like Your Business

If you want to treat forex trading like your little business project, you are on the right track to becoming a professional trader. If you are in for the thrill, make fast money, consult our other articles about this to have at least a bit better luck (probabilities), you are going to need it. Now, making things serious will result in serious outcomes. Forex, after all, will just reflect what you have been doing and how on several aspects: your mindset or psychological aspect, how you manage your capital when trading or risk management, and finally your trading methods. You have to master these three pillars of forex trading. All of these aspects need to align with your personality and lifestyle. 

Now that we have outlined the most important things you need to focus on, let’s first get acquainted with forex and trading. Your first stop can be babypips.com. The internet is full of guides about forex, however, this portal has easygoing content beginners like. You can also consider our article about free resources you can gradually explore as your skill and knowledge grow. Some things need to be understood before trading, consider babypips as your encyclopedia about forex, however, we do not recommend applying right off trading methods in the later lectures about advanced trading. This part has to be molded as you want and at the end of the day, where you have the best results. Actually, the biggest part of making yourself a pro is finding where you perform the best, all aspects combined. 

Trade Demo First!

After you have a picture of what forex is, you might try demo trading. Demo trading can be done in several ways, and again the internet is providing you the best tools for this. Just two decades before, traders had a lot harder way to test their trades. You can try to handle the tradingview.com portal and try out some trading. Use their charting to explore practically what you have learned from babypips lessons, spend some time getting familiar with the charts. The replay button on the top is very handy if you want to test out your trading ideas. 

After you get familiar with charts, time to get to some demo trading. Metatrader platform is great for this and is supported by the majority of the brokers. Find one regulated broker you like, consult our resources to find one, and get familiar with the client, there are many guides online. Demo accounts are where you will spend most of your time, forward testing or trading in real-time, and backtesting your strategies. Only by doing this part, you can know if you have something worth working on further. Of course, there is a proper way of doing this too as we have explored in the previous articles. Know you are most likely into an emotional rollercoaster, what you have made may not work for a long time. If you find yourself in a position you become wondering again, you may need more guidance. 

Take Advantage of All Resources

At this point, you may try to find other resources where you can have a glimpse of how professional traders trade. By professional, we mean proprietary firms and fund traders that have real experience trading large portfolios and manage other investors’ money. To find these people is not easy, however, social media is a good source where to seek them. Learning from the greats is completely normal, even required if you want to get to the top of the forex game. Find like-minded people and their channels on youtube, tweeter or forums. It is important to align your trading ways with similar traders or their strategies.

The result from this is that it could point what is missing from your current strategy which is not performing well. But also, inspired to try new things too. Experienced traders have discovered what works and what is junk already, most of the methods and tools are not very good, so do not be surprised if everything you have made so far is way below what is considered good and consistent. 

Once you make your strategy sound and rigid, traders at this point often fail on the psychological aspects. Messing up with the rules that could work is a common mistake. It is just a matter of if you can keep consistent with your strategy to get consistent results. Of course, the strategy that works is backed up by rigorous proving grounds you had to endure but everything can fail if you do not follow it to the letter. There are so many reasons to get off track on the psychological aspect many professional traders agree this is the most important pillar. Right after it comes how you manage your risk in trading. Therefore, all things considered, you might want also to include some books while you are exploring other strategies and traders. 

Forex Reading Materials

Forex books come in many flavors, however, when you are getting started it is recommended to read those that concern with trading psychology. Some of the most interesting books in this category do not even talk about forex trading, but everyday discipline. Once you have understood some strategies on a more advanced level, and also explored other tools not mentioned on babypips or other media, it is time to make sure you are not making any emotional decisions in forex.

Some of the books we recommend to get started are from Ray Dalio, one of the best economists who can transfer an incredible amount of useful information that is easy to digest. Advanced forex psychology books, but good ones may come from less known traders, such as “No Nonsense Forex Trading Psychology” by Patrick Victor. Books such as these not only point where your drawbacks and mistakes are, but also motivate traders to keep pushing to the top. As mentioned before, not quitting is the only way to succeed.

With this article, you have some starting points but also you know what to do as you progress. Exploring forex trading is a very engaging journey, for those that like the idea they can discover their own strategy or system of indicators that make money over many years will certainly dive into this world and be persistent in their quest. If you need more resources consider our free resources article.

Categories
Beginners Forex Education Forex Basics

Exploring Common Beginner Statements Regarding Forex

Before you ever began trading, you probably had opinions about what it would actually be like. Maybe you assumed it was an easy way to make some extra money, or you might have been doubtful that it would actually work. Either way, most traders figure out that their original expectations about trading were wrong once […]

Before you ever began trading, you probably had opinions about what it would actually be like. Maybe you assumed it was an easy way to make some extra money, or you might have been doubtful that it would actually work. Either way, most traders figure out that their original expectations about trading were wrong once […]

Before you ever began trading, you probably had opinions about what it would actually be like. Maybe you assumed it was an easy way to make some extra money, or you might have been doubtful that it would actually work. Either way, most traders figure out that their original expectations about trading were wrong once they actually open a trading account and start doing it.

Perhaps it turned out to be harder than you planned or you might have been surprised to learn that you actually can make money doing it. If you still haven’t tried trading yet, take a look at some of these beginner statements to see if you have the right or wrong first impressions about what trading is really like. 

You Can’t Make a Living from Trading

Yes, you actually can make a living from trading, but there are a few catches. First, you would need to make a sizable investment into your trading account. Think around $30,000 or so. You’d also need to invest enough time into trading while following a great trading plan with experience. If this doesn’t sound like it fits within your guidelines, you should know that you can still bring in extra income from trading, even if it isn’t enough to fully support you. Many traders actually work regular jobs and trade part-time and there are many different strategies that will allow you to do this, but you can’t expect to become rich in a few days. 

It’s too Hard

Everything you need to know about becoming a successful forex trader is available online and much of this information can be accessed for free. There are also professionals out there that want to share pro tips with you so that you can make money and avoid making mistakes they’ve made along the way. The idea that trading is hard actually comes from people that don’t invest the time into learning how to do it. If you don’t do research and learn to work a trading platform, you’re bound to feel confused and more likely to enter trades that will go against you. It isn’t hard to learn to trade – it just takes time and dedication. Those that are looking to make a quick buck are often thrown off by this fact. 

Most Brokers are Scammers

You might be wary about choosing a forex broker or view all of them as shady. It’s true that scammers are out there, but there are also many reliable options with terms & conditions that will protect you from fraud. All you have to do is spend some time researching any potential broker you’re considering. You’ll want to check their regulation status (you might want to lower your expectations if you’re located in the US) and thoroughly read through their terms & conditions for information related to hidden fees, withdrawal policies, and so on. You can also look for customer reviews online to see opinions that aren’t only one-sided.

Categories
Forex Psychology

Avoid Psychological Mistakes that First-Time Traders Make

Psychology can affect one’s success as a trader in many ways, some of which may be more obvious than others. After all, forex traders can feel happy and overconfident when they’re up, sad or angry when they’re down, and everything in between. If you’re new to trading, it’s important to be aware of all the […]

Psychology can affect one’s success as a trader in many ways, some of which may be more obvious than others. After all, forex traders can feel happy and overconfident when they’re up, sad or angry when they’re down, and everything in between. If you’re new to trading, it’s important to be aware of all the […]

Psychology can affect one’s success as a trader in many ways, some of which may be more obvious than others. After all, forex traders can feel happy and overconfident when they’re up, sad or angry when they’re down, and everything in between. If you’re new to trading, it’s important to be aware of all the ways that emotions can affect your thought process in order to help or hinder your trading decisions. Start by taking a look at these 5 common psychology mistakes below to make sure that you aren’t making them.

Mistake #1: Being Overly Confident

Some traders start out with the idea that trading is an easy and quick way to make money. Of course, if that were true, everyone would do it. Trading can be profitable, but it takes a lot of time and dedication to learn everything you need to know and to develop a solid trading strategy. You need to be disciplined and will probably spend some time learning how to control your emotions. Traders that start out feeling overly confident are also more apt to make certain mistakes, like overtrading, taking larger position sizes than they should, risking too much, and so on. An overly confident trader is also likely to start out with heightened expectations and might want to quit if they can’t meet those goals. These mistakes can put you on the fast track to wiping out your trading account. 

Mistake #2: Being too Emotional

In order to be a successful forex trader, one needs to learn to be disciplined and control their emotions. This is easier said than done. You’re bound to feel upset when you lose money, happy when you make money, and so on. However, these emotions can affect your trades more than you realize. For example, a trader that loses a few times in a row might become angry and take up revenge trading, which involves risking more money out of desperation to get back their losses. Or the same trader could become fearful or anxious and might overthink their trades or be too afraid to enter trades at all. If you’re feeling emotional, the best thing to do is step away, even if only for a few minutes. 

Mistake #3: Overthinking your Trades

An anxious trader might place their stop loss and then overthink it to the point that they pull out too early before the stop loss has been triggered. At this point, you might find that the trade goes on to make more money. Pulling out of trades too early is a common psychology issue that is based on fear and anxiety and is even more common after a trader has experienced bad luck. The final outcome of your trade should be a stop loss triggered, breakeven, or profit taken. Once you enter the trade, the best thing to do in this situation is to leave it alone.

Mistake #4: Jumping into a Trade too Soon

Traders usually make this mistake because they are eager to enter a trade due to the fear that they are going to miss out. This is especially true at market turning points. Experts say that it’s better to miss the beginning of the move if you can’t predict that it will be a winner. If you’re able to confirm that the last 50% of the move is a winner, you’ll get much better results than you would if you jump the gun on these types of moves. 

Mistake #5: Taking Losses Personally

One of the first things you need to accept as a trader is that losses are inevitable. Even the best forex traders out there have lost at some point or another. Some traders fixate on their losses and allow themselves to become resentful. Others might beat themselves up because they failed. The best way to deal with losses is to remain calm and remember that they are normal. Then, you can examine what went wrong to see if it was something you did or an unavoidable loss. If you did something wrong, simply learn from your mistake and move on without making yourself sick over it.  

Categories
Beginners Forex Education Forex Basics

Top 3 Steps to Take Before Trading Forex

Starting your journey as a forex trader may seem rather daunting at first. You’ll probably ask yourself where you should even begin, what you need to know, and how will you know when you’re ready to open a live account. Following our three-step guide can help to make the process less intimidating.  Step 1: Educate […]

Starting your journey as a forex trader may seem rather daunting at first. You’ll probably ask yourself where you should even begin, what you need to know, and how will you know when you’re ready to open a live account. Following our three-step guide can help to make the process less intimidating.  Step 1: Educate […]

Starting your journey as a forex trader may seem rather daunting at first. You’ll probably ask yourself where you should even begin, what you need to know, and how will you know when you’re ready to open a live account. Following our three-step guide can help to make the process less intimidating. 

Step 1: Educate Yourself

While this category might seem broad, allow us to explain in more detail. Education is the most important factor that will affect your success as a forex trader down the road. If you don’t have this, then you’ll join all the other beginners that have wiped out their accounts and walked away from trading for good. No matter how eager you are to start, remember that taking the time to learn is tied in with investing in your future. Profits aren’t guaranteed in forex trading, but a trader that really knows what they’re doing will always get farther than a beginner that only knows the basics.

There’s a lot of information out there, so you may not know where to start. Here are some of the things you’ll want to learn about:

  • Forex Basics – this would include terminology, articles that explain what forex trading is, etc. A Google search for “forex basics” will bring up a lot of helpful information. 
  • Mechanics of Forex – like navigating a trading platform, placing orders, exiting orders, setting a stop loss, how-to videos, and so on. Most brokers work with the MT4 platform, so it would be helpful to watch YouTube tutorials for it. 
  • Forex Strategies – there are a lot of them and reading about the various strategies other traders use will help you to decide what might work best for you. Scalping, Bollinger Bands, trend following, and swing trading are a few well-known examples. 
  • Technical and Fundamental Analysis – this involves making trading decisions based on charts and data or information in the news. 
  • Risk-Management – this is one of the most important parts of your trading plan. Setting a stop loss and using trailing stops are common ways that traders limit their losses. Only risking a small percentage is another helpful practice. 
  • Miscellaneous Articles – articles about trading psychology, tips and tricks, and various other tidbits of information can help to expand one’s overall knowledge of trading. 

While there’s a lot to learn, the good news is that you do all this research for free. There are also several different mediums for learning, so everyone can find something that helps them take in that information. For example, free YouTube videos, webinars, and seminars can help auditory learners, while articles and eBooks can help those that would rather read the information. Free training courses are also available and really go into detail about the things you should know. 

Once you think you’ve taken in enough information, there are a few things you can do to test your knowledge. Start out by taking quizzes about forex information – if you don’t know most of the answers, then chances are that you haven’t studied enough. If you’re acing those tests, then move on to a free demo account, which is like a practice simulation account with virtual currency. Do keep in mind that some things differ on a demo account, so you shouldn’t walk into a live account with overconfidence just because you get amazing results on your demo account. 

Step 2: Choose a Broker and Open a Live Account

Once you’re ready, the next big step you’ll need to take is opening a live account. The crucial factor in this step involves choosing a good forex broker. If you open an account with a scammer or a brokerage that charges high fees, you aren’t likely to profit. Therefore, it’s important to find a broker that is preferably regulated with good user reviews online. Be sure that any potential broker has a transparent website and a helpful customer support team that doesn’t seem pushy.  Here are a few questions you’ll need to ask yourself when you’re comparing forex brokers:

  • What do the spreads look like? Are they lower or higher than average?
  • How much are the commission fees?
  • What types of accounts are available? Some brokers offer Mini/Micro/Cent accounts, Standard/Classic accounts, Platinum, VIP, and other accounts with different perks. 
  • Can you afford the minimum deposit requirements? There are brokers out there that will let you open an account with $5, but some want $500+ for their cheapest accounts. 
  • What trading platform does the broker offer? MT4/MT5 or cTrader are some of the most popular options.
  • Does the broker charge fees on deposits and/or withdrawals? Also, what type of funding methods are available? If you want to fund quickly, look for options like credit/debit, or eWallets and cryptocurrencies like Bitcoin. If standard bank wire is the only option, funding will be slow. 
  • What type of leverage does the broker offer? Beginners should be satisfied with 1:100 or less, but more experienced traders may prefer higher leverage.
  • Does the broker offer any extra perks, like free educational resources or bonus/promotional opportunities? This isn’t necessary, but it is attractive if one or more of these is available.

Of course, there’s more you’ll need to look at when choosing a broker and you can find articles online that explain in more detail. Always be sure to read the fine print and terms & conditions as well so that you’ll know about any crazy withdrawal policies or hidden fees. Remember, opening an account with a good broker is crucial for success.

Step 3: Build Your Trading Strategy

We mentioned the need to research trading strategies in step one, but this is where you’ll need to put your trading strategy together. Here’s a quick overview of some of the most well-known strategies:

  • Scalpers make many small transactions quickly, essentially profiting from very small price changes. The idea is that these profits add up over time, but one large loss can eliminate everything that the trader worked hard to make in one sweep. 
  • Day trading involves making many trades during the day, sometimes in the hundreds. These traders almost always close their trades out before the day’s end, rather than allowing them to carry over to the next trading day.
  • Swing traders primarily look at technical analysis and attempt to capture gains in a financial instrument over a longer period, such as a few days or weeks. 

There are many other trading strategies out there. Some look to profit over the short-term, while others are longer-term plans. No matter which strategy you choose, you’ll need to have risk-management precautions in place to limit your losses. Building a good trading strategy is the final step to becoming a successful forex trader. Once you start using your strategy, consider keeping a trading journal to watch for any changes that need to be made. Also, don’t put all your faith into indicators or Expert Advisors. You should always keep a close eye on these things and double-check that indicators are giving off accurate signals. Beginners might do better to avoid these altogether, as many have made the mistake of thinking that they are the answer. 

Conclusion

The process of becoming a successful forex trader doesn’t have to be intimidating if traders take things step by step. You’ll need to start by getting a free education online, and there’s a lot to learn. Don’t rush, even if you have the money to invest and you’re feeling eager. Remember that opening a trading account without enough knowledge is the number one mistake that beginners make. Once you’re ready to move on to a live account, you’ll need to put in an equal amount of effort researching different brokers and comparing their offers. Finally, you’ll want to perfect your trading strategy with risk-management in mind. We can’t guarantee profits to any forex trader but following these steps will help to set you up on the road to success. With enough knowledge, a good broker, and a well-thought-out trading plan, you could go on to have a very profitable career.

Categories
Beginners Forex Education Forex Basics

10 Steps To Starting to Trade Forex

Forex trading is complex, there’s no doubt about it. However, it is an absolutely fantastic opportunity to get yourself some financial freedom to get out from under that horrible boss that is holding you back and making your life hell. While it is a great opportunity, it also isn’t an easy one, if it was, […]

Forex trading is complex, there’s no doubt about it. However, it is an absolutely fantastic opportunity to get yourself some financial freedom to get out from under that horrible boss that is holding you back and making your life hell. While it is a great opportunity, it also isn’t an easy one, if it was, […]

Forex trading is complex, there’s no doubt about it. However, it is an absolutely fantastic opportunity to get yourself some financial freedom to get out from under that horrible boss that is holding you back and making your life hell. While it is a great opportunity, it also isn’t an easy one, if it was, there would be millions of more successful traders out there. Many people end up giving up or losing whatever it is that they have invested, this is down to the simple fact that they simply did not know what they were doing, or at least not properly. They have not had any guidance and so they do not have any obvious routes of progression.

We have come up with 10 steps that you can follow that will help guide you through the starting points of your trading journey. They are not perfect and there may be some things that you feel you want to do differently, but stick to at least a similar track, and it will make the process of learning and developing yourself as a trader a lot easier. So let’s get on with 10 steps to start your forex trading career.

Step 1: Learn everything!

Ok, so maybe not absolutely everything, that would be impossible, but you need to be willing to learn everything that you need to, which may actually turn out to be a lot more than you are expecting. If you are just starting out then you probably don’t know much about it, you probably only know what you have been told or what you have seen from the outside. There are a lot of different terms and phrases out there that will make little to no sense to you, these are things that you are going to have to learn. 

Forex is a game of probabilities, many see it as gambling, you need to come in with the mentality that it is not, you are there to play the game, not to gamble. You should never place any trades without first understanding why you are placing it and what your chances are of it being a good trade. One thing that you need to understand is that you will never really complete this stage, there are always new things to learn when it comes to trading so you will be constantly learning throughout our trading career, but coming into it knowing that you are required to keep learning and to learn pretty much everything you can is a great first step.

Step 2: Get a broker

There are a lot of brokers out there, thousands if not potentially millions, so it would be unreasonable to have you look at every single one in order to work out which one is right for you. As you were going through the first step, you most likely would have come across a number of different brokers In an ideal world you would go with one of the more trustworthy and well-known brokers, checking reviews from independent sources and also asking any actual traders that you may know who they use. Try not to look for special offers or bonuses, instead go for one with better trading conditions and ones that others give good recommendations for, these in the long run will work out a lot better.

Step 3: Open an account

Each broker that you find will most likely have a number of different account types available, each one offering slightly different trading conditions Our favourite type of account is an #eCN account as they generally come with low spreads and if the commissions are kept low they can be a dream to trade on. As You are just starting out we would suggest opening up an account that does not have a hefty initial deposit limit, in terms of leverage, it is not too much to worry about at this point as again, you are just starting out so you do not want to over-leverage yourself. Be sure to play around with demo accounts too, try to get a demo account that does not start with a million bucks, this is not realistic, you want a demo account with a similar amount to what you would be trading live. Just bear in mind that while this is your first account, it certainly won’t be your last, so it is not the end of the world if it isn’t perfect, you can always open up another one before going live.

Step 4: Download a trading platform

Different brokers will offer different trading platforms. The most popular ones around the globe at the moment is from the MetaQuotes company, they have two platforms, the most popular MetaTrader 4 and the slightly less popular MetaTrader 5. MetaTrader 4 dominates the retail trading market and is one of the best supported by the various brokers. It also comes with tons of documentation as well as addons through the form of indicators and expert advisors (automated trading robots). Try out a couple of different platforms, but if you are really not sure, we would say to play it safe and stick with Metatrader 4 as your trading platform of choice. This is an important choice as not having a platform basically means that you cannot trade, however, much like with the accounts, it is not the end of the world if you start with one which you end up not liking, you can very easily switch to one of the other available platforms.

Step 5: Get a risk management plan

It may seem like a relatively small thing to do and it doesn’t actually take much time, but creating your risk management plan is one of the most vital things that you can do. It can be the make and break of your strategy, it is the thing that stands in the way between a small loss and a blown account. You can of course trade without one, but it is not something that pretty much anyone would recommend. The risk management plan is simply a set of rules that you have put in place to protect your account. Many people look at risking 1% to 2% of their account per trade, the risk management plan ensures that no more than this is lost with each trade, without one that 1% loss could in fact turn into a 100% loss. Try to make it in like with your own risk tolerance so things do not get too stressful for you.

Step 6: Learn to analyse the markets

This is where you can work out which trades to actually make. There are a lot of different ways to analyse the markets and each person will probably tell you differently. We are not going to instruct you on exactly how to do it, that will be up to you to learn the way that suits you, but we will give you some ideas on what to look for. Many forms of analysis will fall under one of two categories, fundamental analysis or technical analysis. Fundamental analysis is all about looking at how things like news events will move the markets, things like GDP or unemployment rates. Technical analysis is where you look at the markets as a whole, many people use indicators to gather this information, they can measure a number of different things and many traders seem to edge towards the technical analysis side of things. It is important that you go for the one that better suits you, so try out a few different techniques.

Step 7: Place some trades

Hopefully, you now have a grip of some of the basics, you have a broker, an account, and a trading platform, you also know how to do some basic analysis and have a risk management plan in place, the next thing to do is to actually place some trades. You should be doing this initially on a demo account, of course, and this is where you will really get a feel for trading. This is where you will work out what has worked for you and what has not, giving you the opportunity to change things and improve. Make sure you do not have the expectation of being able to win straight away, many go approximately a year before they have winning months, so you should be expecting something similar. Use these trades as a gauge for the level you are at, use them to improve.

Step 8: Look at trading styles

There are a number of main trading styles, the shorter-term day trading and scalping and the long term swing trading and position trading. Being able to find the one that both matches your personality but also works for the amount of time that you have to trade. Generally the shorter the trading timeframe the more time you need to be sat at the front of the computer. So if you only have a few minutes each day, scalping will not really work for you. Starting out, you are probably doing it part-time along with your job, so try out the longer-term ones initially, of course, if you have days off during the week, scalping could still work for you. Try out all four styles before deciding though, you may find that you enjoy one of the ones you otherwise thought you would not.

Step 9: Start and keep a trading journal

A trading journal is a vital bit of kit, it is basically where you write down everything that you do when it comes to trading, the trades you made as well as the ones you did not. You also include the reasons why you made it or didn’t, how long it was kept open, the profits, the losses, and more, pretty much everything. This gives you the perfect document to review when things have gone well as well as when they have not. It can tell you of your trading habits, making it easier to find the bad ones and get out of them, it can also tell you whether you are sticking to your trading rules, all very valuable information when looking to improve.

Step 10: Learn some more

We said that step one was going to be ongoing and so it is here at the end too. You will never stop learning, as soon as you think that you know everything you will be in trouble. Always consider yourself as available for learning, do not be afraid of things that you do not know, embrace them, and take on the new knowledge.

So those are out 10 steps to start forex trading. There are, of course, other things that you should be doing, but those will become apparent as you go along. Follow the steps above and you’ll get off on the right foot for when you decide to start your trading career.

Categories
Beginners Forex Education Forex Basics

Six Key Steps for Beginning Forex Traders

If you’re considering forex trading as a potential way to add to your income, you aren’t alone. More and more people have been opening up trading accounts lately and for good reason. A trading account is a great way to add to your savings, help you through retirement, or simply add money to your pocket. […]

If you’re considering forex trading as a potential way to add to your income, you aren’t alone. More and more people have been opening up trading accounts lately and for good reason. A trading account is a great way to add to your savings, help you through retirement, or simply add money to your pocket. […]

If you’re considering forex trading as a potential way to add to your income, you aren’t alone. More and more people have been opening up trading accounts lately and for good reason. A trading account is a great way to add to your savings, help you through retirement, or simply add money to your pocket. As the nation is currently more than 5 months into the Coronavirus pandemic, there’s no better time than now to think about trading as a potential part-time or full-time career. 

While trading can be profitable, there are some things you’ll need to know before you get started. There’s a lot of information out there, so getting started can seem daunting and the process might even dissuade some potential traders from ever starting their career. If you want to become a successful forex trader, take a look at our 7 key steps below for an easy-to-follow guide on how to get started.

Step #1: Get Educated!

You should start your forex career by learning about trading, which can be done by reading articles, watching videos and webinars, or attending seminars, taking an online course, and taking advantage of other free educational resources that can be found online. The sheer amount of information out there might seem a little overwhelming, but you can simply start with the basics by searching “beginner forex resources” or “how to trade forex”. From there, you’ll be ready to move on to more technical subject matter like risk-management, trading strategies, mechanics of using a trading platform, and so on. Also, be sure to do some research on trading psychology and try reading tips and advice from a few established traders that inspire you. 

Some might want to jump in headfirst by opening a trading account and learning at the same time, however, this isn’t the way to go about it. If you open a trading account too soon, you might choose the wrong broker, and you’ll be more likely to want to start trading before you’re ready. Another downside to opening an account too early is that some brokers charge inactivity fees. This means that you would be charged because you opened the account and deposited money but didn’t make a trade within a certain timeframe. Overall, it’s much better to ensure that you are prepared to start trading before you open your account.

Step #2: Test Your Knowledge

Once you feel that you’ve learned enough, you still may be eager to open your trading account. It’s great to be excited about trading, but you should really test your knowledge first. There are two good ways to do this, one of which being quizzes and the second being demo accounts. Quizzes can help you gauge your knowledge before you make that first investment. If you notice that you don’t understand a lot of the terminology and you’re failing the quizzes you take, then you probably need to spend more time learning. Try writing down any questions you get wrong or anything you don’t understand for guidance when you go back to researching. Demo accounts offer a more hands-on approach and can be opened for free through most forex brokers. These accounts simulate a live environment by giving you a virtual account balance so that you can practice trading. This is a good way to see if you’re ready for trading and can help you learn to navigate a trading platform. You can also test out your strategy to see how it performs before risking real money. Once you get good results, you’ll be ready to move on to step 3. 

Step #3: Choose a Broker and Open a Trading Account

Choosing a broker is a big decision and deserves careful consideration. If you make a bad choice, you could wind up paying way too much in fees, be forced to deal with lackluster customer service, have issues withdrawing your own money, and the list goes on. Fortunately, there are a lot of trustworthy brokers out there that won’t charge you an arm and a leg or try to take advantage of you. Remember that your broker’s fees will eat into your profits, so it’s important to compare your options and read reviews about any potential choices.

Once you’ve found a suitable broker, you’ll be ready to open a trading account. This doesn’t take much effort; you’ll simply need to register an account and make a deposit. The amount of your initial deposit will depend on the broker and account type you’ve chosen. You’re also likely to be asked for a POI (proof of identity) document, like a driver’s license, and a POA (proof of address) document, like a bill in your name that displays your address. Providing these shouldn’t be difficult, as you can usually take a photo of the document on your phone and upload them that way. If you have issues finding these documents, your broker’s customer service team will likely help you to find a solution. 

Step #4: Create a Trading Plan

Your trading plan has to do with the way you trade. The reasons why you will enter and exit trades, the time of day you’ll trade, your goals, how much you’re willing to risk, etc. are some examples of the topics that your plan should cover. Starting with a good plan is crucial for success because it helps you to outline the things that will define what type of trader you are. 

You’ll also want to come up with a trading strategy, which is different from your trading plan. Scalping is an example of a strategy. Scalpers open and close many trades per day, essentially aiming to target small price changes in the market. Day trading involves making multiple trades per day and closing those trades before the end of the trading day, while swing traders leave their positions open for multiple days or even weeks at a time. Each strategy offers unique benefits and disadvantages, so be sure to choose one that works the best for you. 

Step #5: Start Trading

As you begin trading, you should try to remember everything you’ve learned and be sure to look up anything you might be struggling with. Don’t give up if you get off to a bad start – simply take a look at what’s going wrong so that you can fix the problem. As long as you’re making money, you have something to be proud of, as many traders lose some money in the beginning. Know that you’ll have better success and make more profits as you spend more time trading. All of your hard work and dedication will pay off in the long run. 

Step #6: Analyze Your Performance

You might think that the last step is completed once you start trading, but this isn’t the case. After you have some trading activity, it’s time to look at your performance and your profit/loss ratio. Have you made money or lost it? The best way to keep track of this is to keep a trading journal, which details each trade you made. You would list the reasons why you entered and exited the trade, how much you made or lost on the trade, and so on when listing journal entries. Then, you can go back and figure out what’s going right or wrong, what you need to change, and what needs to stay the same. A trading journal can really help to see the bigger picture so that you can perfect your trading strategy over time and make as much profit as possible without losing money.