The potential to make money from Forex trading is an attractive thought to many novice traders and trading admirers who did not yet take the plunge. The first thing one would do is search for ways to better understand Forex. As a beginner, it is important to take things slow and get to a certain level of knowledge about the markets, the different strategies, and risk management. Doing so diligently can increase your chances of success in this new venture.
To grow your confidence and begin trading, you need to get a Forex education. There is a lot of information on the topic online. Invest your time in finding reliable educational sources and reading up, or watching video lessons. There is no shortcut to learn how to trade Forex. And the process of gaining knowledge is critical for your future trades’ performance. Get to know everything from the basics of how trading works, to managing risk and implementing strategies.
And there are a lot of options to choose from if you wish to start learning. You can start with an online course about the world of Forex or trader tips for beginners. Or you can watch videos from trustworthy sources, read articles, or participate in training. The online community of Forex traders is vast and there are many channels that can put you in touch with experienced traders who are happy to share their wisdom. This brings us to another point, learning has many facets. All are equally important on the journey of becoming a successful trader. You can learn from experience, education, and mentorship. It is always a good idea to get in touch with someone who can guide you.
Just as there are various ways of learning about Forex trading, there are also various topics to cover.
Learn About the Currencies You Trade
Clearly, you need to understand what you are trading. Novice traders might be compelled to jump in and trade on instinct or hearsay. This may lead to loss and disappointment. Therefore, in your educational process, try to really appreciate the currencies you plan to trade. That means, learning about currency pairs, historical data and patterns, economic news, and events in the countries involved. That way you will gather a rounded sense of those currencies and be better prepared when trading them.
Find a Broker
Another crucial aspect of your journey is selecting a broker and trading platform. Choosing right early on will first help avoidable disappointments. These are often connected to faulty or basic platforms, lack of information from the broker, or simply unreachable customer service. The broker should be reliable. It is your backbone in trading, therefore, conduct due diligence and read up on reviews. Also, it’s a good idea to choose a broker offering a wide range of trading instruments. Commonly, they would have an educational section and details on the features of the trading platform to support you. Initially understand the principle of trading, the platform itself, and the basic terms: spread, lot, leverage, swap, commission, pips/points, trend, trade, order, short, long, quote.
Practice, and More Practice
Well, we can never say it enough. Practice does make perfect. Or at least, as perfect as can be. Aiming towards success and maintaining a course without being demotivated is already an achievement. In the early stages of your trading journey you may face disappointments, or even become disenchanted with trading Forex altogether. The short answer is: Don’t. And there are proven and practical sides to learning that will boost your confidence as a trader. Here are three of them:
Having what is commonly referred to as a demo account means you can practice and gain experience without the risk of loss. It will help you get used to the trading platform, apply and test some of your strategies, as well as observe the market. One of the key things you may only learn through your own experience is controlling your emotions, following the strategy, and closing a trade at the correct time. And this discipline is a common trait of successful traders.
If the term seems strange, the practice of journaling is not. Keeping a trading journal is a teaching instrument as well as a tool for seasoned traders. Be consistent in updating your journal with details for every trade, including your emotional state and the relevant news or events occurring at that time. This will greatly help you assimilate your own experiences. And identifying efficient strategies versus rash decisions, assessing your performance, and eventually, recognizing patterns. The trading journal is necessary for honing your skills and instincts for Forex trades.
One of the drawbacks of exclusively practicing on a demo account is that you miss experiencing the emotional aspect of trading. And this is another key trait of efficient traders. Because controlling your emotions, good or bad, will allow you to trade with a cool mind and prevent your ego from taking over. A demo account totally eliminates risk and by association, reduces your emotional involvement. Learning how to navigate a close call when real money is on the line is also important. So instructors often suggest opening a micro forex trading account. Trading small means you are putting in some money but with limited risk and losses. This real-life experience might teach you more than you expect.
Manage Risks and Control Emotions
By now you probably realize the importance of controlling your emotions in Forex trading. And it is not surprising that managing risk and emotions go hand in hand. Greed and fear are both associated with highly impulsive decision-making. Whereas trading requires a logical and methodical approach, if your feelings keep getting in the way, you should consider training yourself to act objectively while trading. You can also read up on the subject of risk management.
Want to Trade Forex?
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