Are you planning to start trading Forex? Read this beginner’s guide to trading Forex first!
The huge hype about trading Forex that exists these days got to you, too, right? Everybody is talking about this activity, and probably everybody told you that you should also join the trading game. And now you’re here.
Well, trading Forex is an activity that is worth your time and effort. There are actually many convincing reasons for why you should join the Forex market. For example, currently being the largest market in the world, the Forex market offers huge opportunities in terms of winning good money. Besides that, the Forex market has now become accessible to everyone who owns a computer and a strong Internet connection. What’s more, compared to other forms of investment, Forex trading offers you the opportunity to use plenty of technological tools that make trading a lot easier for you.
But, enough about why you should trade. Let’s talk about how you should do it. Here’s everything novice Forex traders should know before joining the market:
Understand that it takes patience
No one blames novice traders for having unrealistic expectations in terms of how much money they can make from trading Forex and how fast. The blame is on the marketing techniques used to promote Forex as a get-rich-fast recipe. Unfortunately, sorry to dash your hopes; this isn’t true. Or, at least, not the fast part.
Many novice traders expect to start making significant amounts of money from trading Forex as soon as they start. But that’s just not how Forex trading works. You don’t just make a lot of money really quickly and with minimal effort involved.
Instead, gaining significant amounts of money with trading Forex involves patience as it can take time until you gain experience. The impulsive gambler mentality of “make money fast” might be successful, but only for a few trades, which might then make you lose everything that you’ve won. So, don’t expect that you’ll become rich overnight. Embrace the idea that gaining money with trading Forex is a long-term activity that requires you to focus on gaining experience rather than earning money fast.
A common mistake that many beginner traders make is to dive straight in. But entering a trade until it’s been well thought out is genuinely a poor trading decision. Like it or not, there’s no such thing as beginner’s luck when it comes to Forex trading. To win, you really have to weigh out your trading decisions and make a safe “bet.”
Yet, starting small it’s not just about being more careful with what trades you enter and which you ignore. It is also about how much money you put in. you may think you are a lucky person and feel confident about trading all your money, hoping that this will bring you back significant revenue. Yet, we’ve already settled that winning big with Forex trading takes time and experience. And, when you don’t have enough experience and trading skills to take trading decisions that aren’t that risky, you might end up losing all your capital right from the beginning.
So, instead, start trading smaller amounts until you gain enough experience and understand all the insights of the market.
Choose the right broker
Choosing the right broker is paramount. We can’t stress this one enough. The choice you make regarding the broker is one that can truly make a difference between having good trading experiences or inferior ones.
Here’s the deal: not all brokers who seem to offer the best deals are the best ones. Here, once again, the blame is on marketing. But flashy offers and deals shouldn’t be your priority when choosing a broker. Instead, it would be best if you focused on many other more essential things, such as:
- Reliability (the broker’s reputation among previous traders)
- Trading tools offered (mobile trading app, pip calculator, trading newsletters, etc.)
- The quality of the trading platform ( how fast it loads, how user-friendly it is, if it is mobile-friendly, etc.)
- Customer service options (email, phone, social media, chatbots, etc.)
Sure, the fees are also important, but it’s best to pay a bigger commission to a broker for using their platform and trust that everything will go smoothly than to pay a smaller commission and get tricked by the broker.
Besides all these, the right broker also means the broker that offers trading opportunities that are suited to your trading style, location, and preferences. For example, if you’re interested in trading binary options, you should look for binary option brokers.
Understand what influences the Forex market
The Forex market has speculative aspects. No one could argue that. But, there are many things that traders can’t control or predict about how the market will move next. So, the best you can do is to understand what influences it to behave in a certain way or another so that you can at least speculate what will happen next.
The Forex market, like pretty much all global markets, can be influenced by various external factors, including politics, extreme weather events or disasters, and economic events. This is why extremely difficult to predict exactly how the market will move in a day, week, or so.
Yet, the trick is to speculate once the things do happen and react fast as the market moves based on the events that unfold around the world. So, for example, if a particular country would go through a political crisis, the country’s currency’s value is typically affected. If you were to have that currency, a good strategy would be to sell before the whole market finds out about it and the price decreases significantly. So, keep an eye on the news to be among the first ones to hear what happened and have enough time to make the best trading decision.
After you gain some trading experience, you’ll also be able to speculate what will happen next by analyzing the charts and identifying specific patterns and trends in the market.