Forex traders spend a great deal of time educating themselves before they are truly ready to begin trading. However, its easy to miss out on some important tips because there are so many sources floating around on the internet. Below, we will provide some of the most important facts that you need to know to succeed in your career as a forex trader. Be sure to take a look, just in case you’ve missed anything!
Be careful with leverage: There’s a big range of leverage caps being offered by different forex brokerages. Some limit their maximum leverage to a safer amount around 1:30, while others push their cap to 1:1000 or higher. It’s true that using a higher option can result in a large win, however, it can also cause you to lose a lot of money very quickly. Our best advice is to proceed with caution and think of the highest leverage options as off-limits if you have a small account balance or don’t want to take a lot of risks. Many professionals prefer a leverage of 1:100, so try this or start lower until you become more acquainted with the ways that leverage can affect your balance.
Start with a demo account: Almost every forex broker offers free demo accounts to their potential clients. These accounts allow you to practice trading in a live environment without risking any real money and can even give you insight into what conditions are like trading for that particular broker. Being that these accounts are absolutely free, and a real account is not required to open one, there’s absolutely no reason why beginners shouldn’t take advantage of the opportunity before investing real money.
Be careful how much you risk: This might sound obvious, but you might not realize how small of an amount experts recommend risking per trade. The answer is actually only 1% of your account balance, so for every $100 in your account, you only want to risk a dollar. It’s better to risk less in case you lose than to risk more in case you win because the latter usually leads to a blown account.
Some brokers will work against you: This also might seem obvious, but the ways that you identify scammers aren’t quite as so. Always check terms and conditions and look at reviews online from other users. Know that some of the worst brokers will hold your withdrawals and refuse to give them back thanks to crazy terms in their contracts. Don’t get this confused with regular procedures, however – requiring a photo of your ID, requiring you to verify that you’ve requested a withdrawal, and other means are common guidelines with most brokers.
Only invest what you can afford to lose: Some people go crazy and invest every penny they have into their account. This will only lead to problems. For example, some customers become very upset because they have no other money and want to immediately withdraw funds from their account, even though it can take at least a few days or more. Some brokers will even charge you to withdraw your money with no trading activity.
Don’t believe in “get rich quick” schemes: Some people will tell you that they have the magic answer to becoming rich as a forex trader. This person might be referring to a strategy, indicator, forex robot, etc. Regardless, you can’t put all your faith into these promises. If it were that easy to become a trader, everyone would do it. This doesn’t mean that their strategy isn’t profitable, however, but words like “guaranteed” don’t mean much considering that the market is volatile, and nobody can predict what will happen.
Make sure your expectations are realistic: A billionaire has more money to invest and will make profits more quickly than someone with a $100 investment. Instead of feeling discouraged, you should simply have a realistic expectation instead of basing your expected results on someone that has a lot more money or experience than you do. You can still make a lot of money; it will just take some time. Some traders start out with heightened expectations because of something they’ve heard or read about trading, only to walk away quickly because they feel that they should be making a lot more money.
