While a lot of laymen believe that online trading is something exclusively related to stock market, the truth is that more and more people are currently considering Forex trading as their investment choice. The Forex market, or the FX as it is more commonly referred to, is the market where people get to exchange different currencies. Seeing how many assets this includes, the FX is currently excelling $5 trillion in volume. So, for all those who are interested, here are top four must-know forex trading tips for beginners.
1. Don’t risk more than you are willing to lose
Keep in mind that in the very beginning, your trades will be closer to gamble than to actual trading. Why? Well, simply because you don’t have the previous experience, your analytical skills aren’t that good, and you still haven’t fully worked out your day-trading strategy. While it is true that all of these things will come to you over time, for the time being, you need to learn how to restrain yourself and the most efficient way to do so is with a stop-loss order. This order should be set somewhere around 1 percent of your total net worth in order to ensure you don’t lose more than you can afford.
2. Find the right platform
In the world of online trading, brokers are replaced by platforms, which means that you need to make sure you are using the adequate tool. The first thing you need is a Forex broker platform that offers low latency and high-quality execution so that you can react in real-time. The second thing you need is something that is accessible across various devices so that you can comfortably trade from your smartphone, tablet, laptop and desktop PC. This is particularly important for digital nomads, who are increasing their presence in the business world with each passing day.
3. Start from a single currency pair
Another thing that commonly confuses beginners is the fact that there are so many possibilities, with all those currencies out there. Unfortunately, in order to fully understand the way in which a certain currency fluctuates, you need to possess the vast knowledge of the forces that influence it. Because of this, it is most commonly advised that you start from a single currency pair, at least until you get a better grasp on how this industry works. EUR to USD is the most beginner-friendly pair, while USD to GBP or AUD to USD might serve as great alternatives.
4. Restrain your emotions
Finally, you need to keep in mind that the more emotional you get, the harder it becomes for you to think rationally. Phrases such as a winning streak or a last-minute comeback belong in a gambler’s vocabulary far more than they do in the one of a businessman. In the first section, we mentioned just how hard you need to try to turn your trading techniques into something reliable, precise and professional and the only way to do so is to learn how to restrain your emotions. Set some clear rules at the very beginning and make sure not to deviate much from them in the future.
With these four tips on your side, you will be ready to make your first several steps in the world of Forex trading. Keep in mind, however, that success takes time. Therefore, you shouldn’t change your principal strategy a month after introducing it, simply because it hasn’t yielded the expected results yet. At the very end, try to learn from your mistakes. This will allow you to grow professionally. One of the greatest winning traits of successful people is that they know how to turn their defeats into assets.