Most new traders lose their first accounts because of some facts they could have avoided. It is then of utmost importance to understand the basics of Forex trading to be successful.
Having poor risk management is often a recipe for disaster. But, rest assured, we have prepared 4 trading tips (for beginners) to improve your trading skills and help you succeed:
1. Learn the basics
Dealing with the currency market is not easy, but it’s not that complicated either. Knowing how to sell or buy a currency pair is part of Forex education.
You must learn from comprehensive and organized forex courses where you will get thorough knowledge in trading and other relevant topics step by step.
There is no shortcut in the journey of becoming a successful trader. No ‘Holy Grail’ exists in the foreign exchange market. Do not waste your time looking for them. You do not need it. The basic components of any Forex trading course are:
- The first step of any trading course will teach you about the basic Forex things (like pips, spreads, swaps, leverage, batch size or volume, trading software, economic news and events, central banks etc.), then teach you about currency pairs, their correlations, chart, candles and much more
- Then, it teaches you a trading strategy, without a plan to re-pay, you will not succeed, no matter how much you know. A good Forex trading strategy always focuses on how to filter (analyze) and minimize the risk of a trade. It would tell you where to trigger a position, where to put a stop loss and where to take profit. And if the trade is worth risking at all.
- Finally, it will tell you how much to risk and how to improve your trading skills, psychology and control your emotions.
2. Risk Management on Forex
The quality of a professional is defined by the quality of the management of its capital (risk management). This is the number one fact in Forex trading.
Nothing can save your account if you do not follow a disciplined risk management method in your trading. There is nothing absolute in trade, commerce is all about probability and risk is everywhere.
3. Learn a basic trading strategy and master it
You must learn an easy and simple trading method that is based on gross price action as a “basic price action” strategy. A good trading strategy always focuses on risks and losses. A strong trading plan is a set of rules to filter a trade to minimize risk and maximize profit.
4. Trading log
Having a trading journal requires work but it is important: you will surely regret it if you do not have this discipline: a trading log allows you at a glance to see the mistakes you made in order to do not reproduce them. The rate of winning trades will increase accordingly.
Moving averages – Trading Classics
One of the simple strategies for beginners on Forex, which does not lose its popularity, is the system based on the intersection of moving averages.
This indicator exists in the standard set of almost all trading platforms. Moving averages are an average indicator of closing prices, opening prices, etc. (the construction method must be selected in the indicator parameters) for a certain period.
What is the Forex strategy for a beginner ?
When choosing a trading system at the initial stage of trading knowledge, you must follow several principles:
- It should be simple. Strategies with a variety of indicators or graphic constructs should be avoided
- Recommendations on currency pairs, timelines, and risk management should always be taken into account first (what are the best-suited parameters for transactions using a certain algorithm, etc). It is a necessary minimum, whose presence is obligatory.
- Do not dwell on a system that does not justify every action. Do not consider algorithms that suggest opening orders with arrows or repainting lines.
Forex trading is very doable even if you are a beginner. The most important aspect to keep in mind is to play safely when you start and have little experience. If you are afraid of losing your money you can always start with a forex demo account and simple trading strategies. There’s help at every step and you can even copy other people’s trading habits if need be.