Tricks of the Trade: What I Wish I Knew Before I Started Trading
They say that hindsight is a gift, and it is certainly a principle that applies to trading. Learning how to trade is a journey, and the lessons along the way make it more fulfilling. However, this doesn’t mean that we can’t pick up a tip (or ten) from more experienced traders. So, read on if you’re a beginner trader and you want to learn more about the common pitfalls that pro traders wished they knew about when they were novices.
1) Learn, Learn, and Then Learn Some More
Knowledge is power, and the more you know about forex trading, the better equipped you will be to make informed choices. We cannot emphasize enough how important it is to dedicate time to learning before kicking-off your trading journey. Furthermore, keep on learning once you are a more experienced trader. There is so much to grasp when it comes to trading strategies, whether you are a beginner or expert, and things move and change rapidly. So, read articles, watch tutorials, or sign up for an online trading course.
2) Create a Trading Plan
An accurate trading plan is one of your best allies along your trading journey. A trading plan, or guide, is a structured list of all the strategies and actions that a trader takes. Having a well-thought-out trading plan is essential for any trader, but it is especially important for novice traders. Think of it as the road map for your trading journey. So, spend as much time as you can to create a trading plan that fully reflects your trading needs and goals.
3) Trust Your Instincts, and Exercise Caution
It is normal to assume that instinct has no place in trading, especially after reading point 2 above. Nonetheless, a well-trained gut feeling can be a great tool to have in your trading toolbox. The key, however, is to train your instinct and use it in a sensible manner.
4) Losses are a Part of the Experience
Losses will always form an integral part of the trading experience. They become real losses when you don’t take the opportunity to review and learn from them. Go back to those losing trades and study what went wrong and how you can improve going forward. So, take them in stride and remember the lessons learned for your future trades.
5) The Power of Demo Accounts and Trading Small with Mini Accounts
A lot of new traders are anxious to dive into the excitement of trading. You can feel the energy and while you may feel ready to start earning, it is beneficial to start slow. A demo account is a great tool to give you the time to set up and experiment with the tools on the MetaTrader platform, (MT4). You can create as many demo accounts as you wish! Test out different leverages, trading currencies, and with an overwhelming amount of virtual funds, the losses won’t feel as catastrophic.
Are you ready to jump into the action, but want to start trading with a smaller investment? A mini account is a smart way to start out since things can get real very quickly when trading with actual money. You are trading in the same manner as a standard account, with one-tenth of a lot. For example, where a standard lot equates to 100,000 units, a mini lot will represent 10,000 units. It enables you to begin your trading journey with smaller investment capital and is also a great place to test out a new strategy while limiting the risk and potential losses. Trading with OspreyFX allows you to access mini, pro, or var symbols within your trading account. You can find more about them and their commissions here.
6) Hard Work and Elbow Grease are Required
It’s important to keep in mind that trading is a skill. If you think that trading will make you a quick buck, you may be disappointed. It is a process that requires practice, dedication, and commitment. Every trader will make mistakes and lose money on some trades, so you will need to put in both time and effort before seeing results.
7) Don’t Follow the Crowd
The classic parental comeback of, “if all of your friends jumped off a bridge, would you?” can also be applied to trading. Just because everyone is doing something doesn’t mean that it’s the best course of action. Do your research, analyze the data, and do what you think is best for your personal trading goals.
8) Be Realistic
The key takeaway is not to expect overnight success. As we have stated above, consistency and hard work are both parts of becoming a successful trader. In a similar vein, being realistic means that you will not be disappointed when success does not materialize instantly or abundantly. In addition, ensuring that your income is diversified and not solely dependent on your trading activities means that you are not putting excessive pressure on yourself to succeed. It will give you the necessary clarity to make judicious trading decisions.
9) Stay up to Date with Global News
Nothing happens in a vacuum, and this couldn’t be truer when it comes to trading. The markets are sensitive to world events, and they will fluctuate accordingly. Being in the know will help you to stay on track and help you make educated decisions. Follow your favorites on social media, read the news, and as many trading resources as you can get your hands on.
10) Choose the Perfect Broker for You
Not all forex brokers are created equal and finding the ideal broker for you can make all the difference when it comes to having a fulfilling trading experience. OspreyFX offers you tight spreads, 1:500 leverage, and a dedicated 24/7 support service.
In trading, just like everything else in life, the journey is as important as the destination. OspreyFX has an abundance of tools at your disposal that can help you start trading armed with the knowledge to succeed. Check out our free Forex education tools, and take the time to sharpen your skills. So, learn as much as you can and trade with confidence!