Beginners Forex Education Forex Basics

Why You Should Focus on Improving Your Trading Skills

Well, understandably, there are quite a few practical benefits you get from polishing your skills in trading:

While these are just a few perquisites you get from improving your trading skills, you should ask yourself what it is that you feel comfortable with or that you really need in your life.

Some people are fine with doing things halfway. They are at peace with what they have and they are not looking for more.

If you are not one of them, then great – we are going to go deep today.

Ok, so the first step is always to see what type of trading you are interested in.

This is a crucial point because depending on your trading style, there are many additional questions we can ask. For example, if you are a naked chart reader, we would not be focusing on your ability to test different indicators but on your ability to understand what the chart is suggesting.

Most of the time people don’t make any changes because everything is going well on the surface. As Idowu Koyenikan said, you must have a level of discontent to feel the urge to want to grow. Still, do we need to get there? Do we need to take a major loss just to see that something in our system is not working? It’s like with beginner traders who manage to get some unbelievable returns month after month only because of reckless money management. This, of course, is never sustainable and, just because they lack experience and don’t listen to experts, they face the consequences of their actions and choices real soon. 

You don’t want to get more than you bargained for and you don’t have to suffer. You need to be attentive to what your style of trading requires.

Therefore, the next step would be to see how you understand risk and how you manage it. This is vital for trading because, as a trader, you will soon learn that it’s not about winning but protecting your account from losses. The better you are at keeping your leverage balanced, the more in control you are of your emotions, but we will discuss this aspect of trading soon enough.

An excellent way to mitigate risk is to diversify your wealth structure (portfolio). As a trader, you have many different options – you can trade forex, stocks, bonds, ETFs, and so on. We cannot predict market behavior, but we can all agree on one thing – change is the only thing we can be sure of. The more you expand your portfolio, the further you are from putting all of your eggs into one basket. 

Now, to get to this point and level of expertise, you do need to invest in your analytical skills. And, even if you say that you are more of a learner from my mistakes type of person, you truly need to acknowledge your ownership in your growth. It simply isn’t enough to say that you made a mistake. The trading world is not that forgiving and your account will prove it sooner or later. 

So, how can we work on our analytical thinking? We journal our trades and we commit to backtesting and forward testing with diligence and a sense of purpose. You don’t have to like it but you do have to recognize its potential for it to work on a regular basis. Your notes are your strongest weapon because they help you track your progress, make conclusions, and think of additional tools, indicators, and strategies you can include in trading to improve your system and render better results. 

Also, make sure not to be too quick to make changes. Developing one’s skills is a process, not a pill you can take for everything to turn to gold. If you see that your trading plan is making you feel concerned, you should give yourself some space and base your judgment on a bigger sample size. You need more trades and much more notetaking to make such vital changes in your trading.

This, of course, will teach you how to do research. In the same way you had to discover different resources on how to trade, now you need to be a detective and investigate how your actions and decisions generated specific results. This process does not have to be dull if you don’t build up unnecessary tension inside and attach negative meanings to it. This approach will help you tackle one of the key trading challenges – ensuring that you have fewer, not more, losses. What you come up with after such research may differ from other traders, but it is nonetheless relevant for you as we are all essentially different people.

Additionally, as traders, we really need to develop an insight into what the market needs. We may think something is relevant but if our everyday trading experience points at some other areas or skills, we cannot turn a blind eye and expect the problem to resolve itself. Similarly, we should strive to learn the conditions under which the market is the most permeable and agreeable with what we aim to achieve. For example, you should learn that unfavorable periods, such as elections, are there to be avoided because we do not need any excess volatility; we need flowing waters and a supportive breeze, not full-blown hurricanes, tsunamis, and volcano eruptions. Unless you adore these risky opportunities.

And, last but not least, you should really devote energy and attention to understanding yourself. Traders are often their own greatest sabotage. If you don’t know what you react to compulsively and why you are like a baby on its own – innocent and dangerous to yourself. Luckily, we are very predictable beings, so if you just take a little time and focus a little more on your emotional reactions, you can learn a great deal about what you do to hinder your personal development and financial growth. Psychology is a fundamental step in becoming a professional trader and ensuring a consistent money flow.

Still, remember that even if you can tick all of the points we listed at the beginning of this article and throughout the previous paragraphs, there is always room for improvement. Often we procrastinate to a large extent because we feel that what we need to do is big – sometimes in terms of the time and effort, we need to invest and, other times, in terms of the importance of what needs to be done.

In case you didn’t know…

We want things to be so perfect, but what we don’t understand is that this lack of confidence won’t go away unless we do something about it. And, the more we push things aside, trying to ignore whatever seems to be bugging us, the more they resurface. It’s like with the Hydra, the monster from Greek mythology – if you cut one head off, two more would grow back immediately. This is how you alone let yourself play out a part in this vicious circle.

Now, we have two major contemplative questions for you:

Who benefits from you staying in this loop of never progressing?

What is bigger – the fear of success or fear of failure?

The psychological benefits are no less impressive or significant than the increase in money in your account. Always keep in mind that what is essential is invisible to the eye (Little Prince).

Trust the process and trust yourself

Still, if you ever feel overwhelmed with the improvements you need to make, just take one thing at a time. Take that notebook and write down one—three things that you can do each day to improve your trading skills. 

Good luck!

Forex Basics

How To Practice Forex Trading Without Any Financial Risk

Let’s make something perfectly clear before we say anything else, you cannot trade without risk, there is no way to make any money without there being any form of risk. Risk is what enables us to have rewards and so when you trade there will be risks. Now that we have made that clear, there are of course a number of different things that you can do to help reduce the risks that you will be taking when you trade. Managing your risk is one of the key elements for being a successful trader and so it is certainly something that you should be putting a lot of emphasis on when you create your trading plans and of course when you actually begin trading.

The first thing that you can do is to work out how large the trades that you are going to be putting on are. Of course, this needs to be decided in line with your overall account capital. If you have a balance of $1,000 and a leverage of 100:1, there is no point in trying to put on huge trade sizes like 1 lot or even 0.5 lots, this will only result in disaster. You need to limit your trade sizes, the lower they are, the less risk you are putting your account under. If you are looking for the lowest amount of risk, then you will want to go for the lowest trade size which for many brokers is 0.01 lots. Of course, this will then limit your profit potential, so really you are going to want to look for a happy medium, somewhere with low risk but somewhere that also offers returns. In relation to just risk though the lower the trade size the better.

You then need to work out where your stop losses are going to be, yes you will be using stop losses. They are the primary way and method that we as traders can use to help limit our potential losses. If we do not use them, then even the smallest trade has the potential to blow an account, it will take a lot but it is possible, so why take the risk? Putting in your stop losses is a sure-fire way to protect your account, when your trade goes the wrong way and reaches the level of the stop loss, the trade will automatically close. Yes, it will be at a loss, but it is a controlled loss and one that was taken into consideration before the trade was even placed. What is important is that we removed any potential risk for further losses and have limited things to be within our strategy criteria.

We spoke about leverage near the start of this article, it is important to get a good understanding of how it works and if you want to keep the risks on your account as low as possible, then you will also want to keep your leverage as low as possible. Leverage allows you to trade with more spending power than the capital in your account, this, in turn, increases the profit potential of the account, which is the main selling point of leverage. What they don’t tell you is how this leverage also increases the loss potential of your trades too, the more leverage that you use the higher the losses can be with each trade and a loss can take away a much larger sum of money than it would have with less leverage. So if you have the balance for it, go for a lower leverage in order to keep risks low.

Pick the right currency pair to trade, it’s probably not a surprise to you that different currency pairs offer different levels of risk, there are three main categories, the majors, minors (crosses), and exotics. The major pairs have the least volatility and the most liquidity, the minors are in the middle and the exotics offer the most volatility and least liquidity. Due to this, it is far more profitable and also risks to trade the exotic pairs, but it takes a lot more skill to do it successfully. Due to this, it is recommended that those looking for lower levels of risk should look to trade the major pairs, things like EURUSD are extremely liquid which means that their movements are less rapid and sudden. They are easier to predict and if something does happen, you often have more time to react than with the exotics. So if you are looking to trade with lower risk, go for the major currency pairs.

One of the riskiest things that you can do as a trader is to trade during times of economic news, there are certain news events that new traders are warned away from, things like the US non-farm payroll, you should not be trading during the times of these announcements. They have the ability to cause large movements in the markets and even economic experts get their predictions wrong on a regular basis, if they get it wrong, then there is a good chance you will too. In order to avoid this risk completely, simply do not trade during the news events Obviously there is unannounced news that comes up every now and then which is unavoidable, but as long as you avoid what you can, you will be reducing the risk that you account is being put under.

The last point that we quill look at is the fact that you need to ensure that your expectations and your goals are realistic. If you have come into trading thinking that you will make thousands each month with a small starting balance then you are mistaken. Many people make it seem like you can and many people probably have, but they are risking a lot with every single trade in order to do this and have most likely lost countless accounts in the process of getting their one successful one. Bring your expectations down and you will remain motivated and feel less like you need to risk more to achieve those goals.

Those are some of the things that you can do to help reduce the risks that your account is being put under, remember that it is impossible to trade with no risks at all, there will always be some otherwise there would be no way to make any money. If you hate risks, then you will need to do what you can to help reduce them, but remember that by reducing your risks you are also reducing your profit potential, so the key is to find the middle ground where you are happy with both the risks and the potential profits that you can make.

Forex Basics

Do You Know the Pros and Cons of Using a Demo Account?

A demo account allows forex traders to become more acquainted with a trading platform and to practice their skills and strategies in a live environment. Since demo accounts use virtual currency instead of real money, traders can use these accounts without taking any financial risk. There are several reasons why beginners and even advanced traders can benefit from these accounts, but there are also some cons that come from trading on them. Below, we will outline both the benefits and disadvantages of demo accounts.


Demo accounts are great for practice. You can take more risks than you would on a live account and more experienced traders can even use them to practice different strategies. Beginners can track their progress and have a better idea of when they are prepared to make a real investment. You can do all the research you want, but nothing is as practical as trading hands-on with a demo account.

They’re free: Most forex brokers offer demo accounts and it should never cost anything to open one. The reason why brokers provide these free services is that they want their potential clients to come into the market better prepared. Traders are less likely to blow their accounts and give up quickly if they have some practical experience. You’re also more likely to open a real account through the same broker that has provided your demo account, so this is a way for companies to gain future clients. 

You can use them to practice different strategies: The internet is filled with information about different kinds of trading strategies. Some prefer scalping, while others take to swing trading, and there are a whole host of other options out there. You might read an article or watch a video about a strategy you’ve never tested and think that it sounds promising. A demo account is useful in this situation because you can test the new strategy without risking real money.

Opening one is quick and easy: The process of opening a demo account does not involve a headache. Brokers don’t ask for nearly as much information as they would if one were opening a live account. Most require your name, email address, and possibly country. Every now and then you might need to provide a phone number, but not always. One can fill in an account opening form and receive their login details in just a couple of minutes. 

You can use them to test indicators: An indicator signals the best times to enter the market and is helpful when used correctly. Some indicators are available for free, but many providers might ask you to pay for them. The issue is that you never know for sure if the indicator is going to work effectively as many of them can give off false signals or experience other faults. This is why most traders test out promising indicators on demo accounts to see if they are worth investing in.

Demo accounts rarely expire: Most brokers will allow you to trade on your demo account indefinitely. Every once and a while, a brokerage might set a 30-day expiration date or cut off access to that account after so many days of inactivity. If you reach out to support, many brokers will allow you to keep using the same account. If not, you can always open a new demo account in a couple of minutes for free, so you can practice for as long as you want without being forced into opening a live account if you aren’t ready. 


Demo accounts don’t prepare traders for the emotions related to live trading: When real money is on the line, we can get overly emotional. If you lose big, you might feel a lot of grief or beat yourself up over it. If you’re winning, you’re likely to feel excited, which can lead to other trading problems. Trading psychology is a whole other matter in itself, but it is important to know that demo accounts can’t prepare you for those feelings because real money isn’t on the line. These emotions can come as a shock to traders that aren’t expecting them.

Demo accounts don’t experience delays or slippage: On a live account, traders might see slippage in times of high market volatility or when important finance related news breaks. Slow internet connections can also cause issues with re-quotes. Everything happens faster on a demo account, so traders might not realize that these problems can occur once they switch to a live account.

You might become too used to using a demo account: Some traders never make the switch to a live account for whatever reason, even with good demo trading results. Perhaps they lose interest in trading or don’t want to make a real investment. The issue is that some traders just become too comfortable on the demo account and they continue to trade on it for an extended period of time. If those traders ever do open a live account, they will be more relaxed because of their altered expectations.

Traders handle money differently on a demo account. Sure, you might take your results seriously, but you won’t always make the same moves when real money is involved. What seems like a good move on a demo account might seem too risky if real money is on the line. This can alter one’s perception and change their results on a live account. Another downside is that many demo accounts start you off with an unrealistic amount of money, which also changes the way you trade. 

Final Thoughts

Demo accounts offer several obvious advantages. One can sign up for them easily through most brokers without paying a dime. The accounts can be used to become more familiar with forex trading and to gain practice using different strategies, leverages, account types, indicators, and so on. However, demo accounts do present some dangers that aren’t as well-known. Traders don’t experience the same raw emotions or fear losing money in the same ways when they know that real money isn’t at risk. They also might not realize how re-quotes, slippage, and delayed execution can affect them in a real environment.

When traders aren’t aware of these issues, they might be too relaxed once they start trading on a live account. Those traders are then likely to incur losses because their expectations are off, and this could even cause them to walk away from trading for good. Despite the disadvantages, we highly suggest opening a demo account and taking advantage of their many perks. Traders simply need to be aware of the dangers involved and ensure that they are prepared to deal with the differences once they open a real account.

Beginners Forex Education Forex Basics

Practice Makes Habits, Not Perfection

The phrase that you most likely would have heard plenty of times throughout your life is that practice makes perfect, but we are here to tell you that this is not the case, especially when it comes to trading when you can never actually be perfect, you may have a perfect trade every now and then, but you overall as a trader will never be perfect. This is not to say that you can’t be great and that you can’t be consistently profitable, of course, you can. What war referring to is the definition of percent: “having all the required or desirable elements, qualities, or characteristics; as good as it is possible to be.” No one can be perfect, there will always be things to improve on and there will be mistakes being made.

This is all very normal, so instead of looking to become perfect, why not look to develop habits, habits that make things easier, habits that ensure that you are doing things the right way, or at least the way that you are meant to bad on your strategies and plans. What we need to be careful of though, is developing habits which do not help us, if we are consistently doing something wrong then it is not going to be good for our overall trading is it? Programming your mind into doing something wrong can make it very hard to change it in the future, so it is important that we get this right from the start.

So let’s look at some of the things that you can do that will help you to develop some good habits that you can start doing straight away.

Start with the basics…

It’s logical to start from the very beginning with the core trading skills and so that is where we will begin. You need these basic skills in order to be a beginner let alone an expert. You need to get yourself a good understanding of different currency correlations, basic economic movements, learn how to identify trends and chart patterns, and to then learn and know the ins and outs of managing risk, which is a big one and something that is paramount to your success as a trader.

It is vital that you do not try to take any shortcuts when doing this first step, you need to be able to perform all of these things easily and quickly. So continue to practice them, you need to be able to do them without really thinking about them, once these have been cemented into your head it will simply come naturally to you when you go to do it for real each time. This is simply building the foundation for the rest of your trading so it is important that you get it right.

Test your skills…

So we have some knowledge and understanding, but we need to be able to test this somehow and the best place to do this is on an account with live conditions. Of course, you do not want to jump straight in with your own money so we need to take a look at a demo account, you should be using one of these to practice for quite a while before you go with your real money, and also back to the demo account any time ta you make changes to your strategy.

For those just starting out, you need to use the demo account in order to help establish some routines, these routines should allow you to identify different trade opportunities, and in order to place trades. You need to test them and practice them in different trading conditions such as quieter times, times of high volatility, trending markets, ranging markets, and more. Ensure that you are logging any results that you get into your trading journal so you can easily look back at them and analyse them to find out what has worked and what has not worked.

Once you have your possessor working out (or more than one) you can then start to think about going into a live trading situation, start by taking very small trades, get comfortable with what you are doing, and the new emotions that come from trading on a live account. You are now risking your own money so it is important that you try to stick to the routines that you created within the demo account, ensure that you are consistent with them and that you are doing it consistently across the different trading conditions that you are experiencing.

Create a feedback system…

The last thing that we are going to talk about is the creation of a feedback system, this is a way that you will be able to see exactly what it is that you are doing and how effective it has been. There Is no point in doing something if you are not able to measure how successful it has been, this will also be a way for you to work out exactly what needs tonnage and the best way of going about that change.

By practicing, analysing and then adjusting and adapting your trading will quickly hasten up the learning process. It will make things a lot easier for you in the short and long run. If you notice something that is consistently holding you back, change it, and test again, keep doing this until you are happy with your progress and your current trading. There Will always be things to improve, you will never be perfect but with each little change, you are gradually making yourself a better trader. You can do this in the form of a trading journal which is something that you’re probably tired of hearing about now. Jot everything down in this little journal and you will instantly get feedback on what it is that you are doing, a vital tool for the future of your trading career.

So those are some of the things that you can do to help you gain some good habits that will ultimately help you to become a better trader. It is a good idea to start doing these as soon as you can, if you are already partway into your career then it is not an issue, you can still work on these things and you can still create those habits that will help you on your journey of becoming a great trader.