There are many new traders entering the Forex business every day. Forex trading is exciting, can be done efficiently, and offers enormous market liquidity. Profits generated from Forex trading can easily be multiplied several times before liquidity becomes an issue. Apart from that, this trading activity can also be done at home. Trading robots can also help do most of your work and very useful technical indicators are available for free on the platform you use. Basically, there will be no end to discussing the many benefits available to those who get involved and make Forex trading a living.
However, it is very important to trade Forex the right way from the start. Forex trading is not an easy activity that can be done carelessly. The right steps are needed to be able to get consistent profits. New Forex traders are usually the most susceptible to making small mistakes that diminish their interest and enthusiasm. The good news is that there are ways to avoid most of these mistakes. Some mistakes that beginners may make do not have to significantly affect their interest and trading account. Let’s take a look at these 7 valuable tips for Forex traders:
1. Start by doing demo trading!
I’m sure you’ve heard lots of suggestions like this. The problem is, just listening will not be very helpful for most beginner traders, which is a shame. You must understand that you will not be able to trade without incurring costs. If you rush into trading using real money, you will most likely experience losses. Most Forex traders underestimate the Forex market, even though this market has many ways to lull and encourage novice traders to trade using real money. Examples like this…
Beginners usually use very small data sample sizes when evaluating trading results. What does it mean? Suppose you try a lucrative trading strategy for the EUR/USD currency pair (Euro against US Dollar) on a demo/practice account. You place a number of trades over a period of one week and achieve a good profit ratio. Let’s say you trade with a profit-loss ratio of 1:1 and you make a profit in 7 out of 10 trades. You then rely on data from the trades you made during that short week and assume that market conditions will continue to work in your favor.
When this kind of thing happens to novice Forex traders, they usually get too big-headed and assume they can consistently make a profit. They can’t wait to start earning money using ‘sure’ trading strategies with real money in just a few days. Then, what happens next? I think you can predict.
1. Don’t get into the ‘pilot seat’ before doing a lot of demo/practice trading.
2. Look for good forex trading instructions/education
3. Avoid short time frames (lower time frames)
4. Don’t chase the market
5. Good risk management is essential — invest your capital little by little
6. Learn to control your emotions—trade like a machine
7. Just enjoy!