Forex Trading Tips For Beginners

Forex Trading Tips for Beginners #1

  1. You can’t get into currency trading as an investor without studying the fundamentals and even though it may look easy from a distance, there are lots of traders who are clueless about what they are doing. Studying a lot about forex trading will position an investor to become profitable in the markets.

  2. Keep in mind that currency trading involves zero sums which means that if 70 percent of traders take the long position then there will be 30% taking the short position. This signifies that those with the short position have a lot of capital on their hands and hence regarded as the stronger hands. The 70 percent who have taken the long positions are therefore regarded as the weak hands which means they will have no option but to put their stocks up for sale when an unanticipated price alteration occurs in the markets.

  3. Always keep in mind that the market is bigger than any individual.

  4. The safest thing to do is to assess the markets rather than make a move.

  5. It’s also safer to analyze trends and make a move or exit based on it instead of looking for the highest or lowest prices to exploit for your benefit.

  6. If you are only making moves in the market relying on seeking the highest or lowest prices than be patient until a high or low price is confirmed before making any moves. Seeking the highest and lowest prices to exploit the markets comes with luck so don’t rush into making any moves unless a high or low price has been verified. This will boost your profit chances and reduce risk.

  7. A specific trading tactic should be created independently for trading when the markets are moving upwards, downwards and range bound.

  8. Being inactive in the markets is an option of a position you can take.

  9. You should purchase dips when the markets are moving upwards and put bounces up for sale when the markets are moving downwards.

  10. Avoid purchasing dull markets in a bearish market and never put your dull markets up for sale in bullish markets.

  11. Uptrends and downtrends in the markets are always happening and the only bone of contention will be which one is superior.

  12. An inaccurate wrong sell signal represents a buy signal while an inaccurate buy signal represents a sell signal.

Forex Trading Tips for Beginners #2

1.    Try to maximize profits and minimize dangers.

2.    Don’t be too greedy and learn to say no at some point in the markets even when you are making sizable profits and use at least some of the profits generated to start other trades. Even though illusions may appear to you that a trade will be earning you millions, that’s often not the case. Being stuck on one position for a long time will result in the loss of all the gains you have made and possibly even more.

3.    Always put measures such as stop limits in place to reduce losses.

4.    You should always act when making losses instead of doing nothing about it with the hope that there will be a turnaround as this could extend your losses to bankruptcy. Just reduce your losses by making an exit and engaging in another trade. You can reduce the danger of running into heavy losses and making substantial profits by creating the desired profit margin in addition to a specific risk level which is acceptable to you for every single market transaction you make, after which a stop-loss order should be defined at your desired price level. However you should be quite flexible here as being so strict could lead you to an exit before the markets move in a favorable direction for you.

5. You should always create stop losses for long positions lower than round numbers such as 10, 20, 25, 50, 75 and 100 while those for short positions should be higher than those numbers.

6. Technical factors as well as financial management strategies should be considered when creating stop losses.

7. You should keep in mind that everyone makes a mistake at some point and the best thing is not to repeat those same mistakes.

8. You will always make losses higher than your very first one.

9. The smartest way to get into forex trading is to hold a mini account for a minimum of one year before signing up for a full account. Within your initial period, critically assess the movements you make, taking into account those that made you profit and those that made losses so you can formulate profitable trading strategies.

10. If you are in dire financial straits then forex trading may not be suitable for you as you run the risk of making a loss and jeopardizing your family’s daily livelihood.

11. Be disciplined and use common sense instead of your emotions when making moves in the market.

Trading Tips: Part Three

  1. Never forget your financial management strategies when making moves in the market.
  2. Don’t rely on one trade but use common sense while making trading moves.
  3. Follow a reward-to-risk ratio of three to one.
  4. Examine the odds of a profit and loss before making any trading move.
  5. Follow a specific strategy when making transactions, never trade freestyle.
  6. Define your aims and work towards them.
  7. Test a trading strategy before following it to the core, with the help of currency charts and a demo account. Once it’s verified as profitable, you can now implement it.
  8. Investors shouldn’t fail to create a plan and implement it.
  9. You should strategize on the exact time you will make an entry into the markets, the amount of risk you will tolerate and the next move you will make with your profits. Emotions such as hope, greed and fear should never cause you to abandon your trading strategy.
  10. Only make an exit after a set stop price is achieved or after the development that necessitated that move has been altered.
  11. In the course of creating a trading strategy, consider price predictions, timing and how you will manage your money.
  12. You can make a trading move no matter what the market signal.
  13. Keep in mind that trading strategies that may be profitable when the markets are moving upwards will result in something different in a downward market.
  14. Making trading moves is the only way you can generate profits. Your trading strategy should be set even before the opening of the markets so that you won’t make any moves based on your emotions. Hang onto your trading position except when there is a major market development.
  15. Never make any move without crosschecking.
  16. Always keep in mind that there are no done deals in the forex markets so you should only trade based on assumptions. It’s wrong to think before a transaction that you will make profits no matter what.
  17. Begin your assessment of the markets by finding out what the basic market trend is.

Trading Tips: Part Four

  1. Avoid following a trading strategy that has been verified by someone else instead of you.
  2. Make sure each new position is not as big as the last one when you are engaging in pyramiding. You should only make additions to a position that is making profits and avoid adding to a losing position.
  3. Avoid investing over 3 or 4 percent of your total capital on one trade.
  4. Your exit point should be set even before you make an entry.
  5. In case you make a substantial loss on your capital, quit the markets, make an honest assessment and only resume trading when your confidence is back.
  6. Never risk money that needs to settle a bill into a trade as this usually brings bad results. Only engage in forex trading if you have separate money for your daily expenses and bills.
  7. Figure out the core reason why you are trading currencies whether to make profits or just have fun. This will help you gain success in the markets.
  8. Avoid meeting a margin call as it will only lead to losses.
  9. Your losing positions should be exited first before your winning ones.
  10. Always create strategies when the markets are inactive unless for very short term trading.
  11. Begin trading from long positions and avoid the opposite.
  12. Enhance exit and entry points with the help of intraday charts.
  13. Get a good idea of day-to-day trading with demo accounts before beginning full trading.
  14. Only make moves based on the market patterns and not the period. Keep an eye on reversal patterns and breakout patterns as they are never rare.
  15. Don’t rely on adverts and statements in the financial media as different people try to exploit anyone they can get to their own benefit.

Please Note: Following the above steps will assure a good amount of success and less amount of failure in Forex Trading.