10 Forex Trading Tips
The foreign exchange market (also known as forex) is the world’s most liquid financial market with over 5 trillion USD global trading per day. Such an environment, needless to say, offers a lot of financial opportunities and new horizons to be explored not just by professional traders and businessmen but everyday people as well.
Whether you’re just starting out or you are an experienced forex trader, the ultimate goal is, of course, to be successful, earn money and benefit as much as you can from the world’s largest financial market.
How can you do that?
That’s quite the question! Although trading forex might be a great way to earn extra money, it involves risks. This means that if you want to be a successful trader, you have to learn how to trade skillfully, efficiently and most importantly, how to become an expert in risk management.
It’s not just about risk management, though. There are plenty of other aspects of forex to learn and explore before you decide to put your hard-earned money on the line. There are technical aspects to take into consideration and of course eagerness to constantly improve and keep up with the dynamics of the market.
No accomplished trader will tell you that you can reach your goals without a proper trading education, tonnes of practice, discipline, learning how to control your emotions and formulating a profitable strategy.
In the following article, we will talk about the above-mentioned “forex trading essentials” and more, so get ready to learn all about the forex tips that will make you a successful trader.
They range from planning, strategy formation, money management, psychology and more, and will help you make smarter, potentially profitable trades as well. In addition, the best traders need to be able to perform adequate self-analysis to understand what exactly is driving their trades and what are their weakest points.
Here are some excellent Forex TRADING tips that will help you succeed as a Forex trader.
Before getting down to business, though, we want to make it clear that the following forex trading tips and tricks are suitable and valid for experienced traders, as well as those who are making their first steps in the world of forex trading. Don’t let the technicalities and complicated language scare you. Forex is not any more difficult than other financial markets. As long as you are armed with knowledge and ambition, you can succeed.
10 Forex Trading Tips That Will Make You A Successful Trader
Before you start something new, begin with the fundamentals. Let’s look at 10 forex trading tips every trader should consider before trading currency pairs.
1. Take Your Time to Learn about Forex Trading
“If you’re not willing to learn, no one can help you. If you are determined to learn, no one can stop you!”
The first one of our 10 forex trading tips that will help you progress your career in trading is, of course, becoming knowledgeable in the field. We suggest you put aside (just for a moment, though) all the big dreams about becoming an overnight millionaire, driving fancy cars and living in a mansion and focus on the reality of today. You need to get a proper forex trading education and then start risking your money.
Why do you need an education?
Because just like with every other skill in life, you have to start with education. Regardless of your trading goals and ambitions, a solid education is your foundation and you can’t go anywhere without it.
Forex trading carries a high risk. Don’t expect to win every trade and get those numbers in your trading account going up every day. To avoid big losses, to execute a winning strategy and be able to manage risks, you need your forex knowledge.
How do you expect to understand how currency pairs work, analyse the market, read through and understand a large amount of data and work with trading signals and trading instruments without spending a significant amount of time learning? It’s impossible.
That’s just the beginning, though.
Technical and theoretical knowledge are essential but you also have to learn how to control your emotions and deal with stressful situations, sometimes provoked by failure.
You’ve already sensed that forex is no joke and you can’t go anywhere without knowing what’s going on.
Don’t have unrealistic expectations that you can become a trader within a week. Ultimately, you have to learn how to benefit from the market before actually enjoying those benefits.
If you are willing to dedicate time and effort to learn, we at Trading Education have your back.
Our free forex trading course is designed to introduce forex to novice traders and help them obtain the needed knowledge to succeed. The course is online and that makes it highly convenient for people with regular jobs and responsibilities.
The chapters include:
- Foundation In Forex Trading
- Mechanics Of Forex Trading
- Advanced Analysis in Forex
- Strategy In Forex
To request the free Trading Education course, simply apply here.
2. Carefully Research and Pick Your Broker
The next one of our 10 forex trading tips is concerned with choosing a reputable broker. As one might say, picking the right broker is half the battle.
You have to spend time researching the differences between brokers and carefully go through their policies, status and legitimacy. Most importantly, though, you have to check independent review sites, recommendations and online forums. Read as much as you can about the experiences of other traders to make a meaningful conclusion.
Unfortunately, there are brokers out there who are engaged in questionable activities and their only aim is to take your money. We’ve all heard the stories. Forex broker scams are real and keep happening. The only way to protect yourself is to do your research and check with regulatory organisations to confirm you’ve picked a licensed broker. You can read more on this issue in our article “How to Make Sure Your Forex Broker is Trustworthy.”
Another thing to consider when picking a broker is whether it's trading platform will suit your individual trading personality. You have to arm yourself with a fine forex trading platform that offers accurate forex quotes, covers the analysis you wish to do and has the tools you require to assist you with your trading, such as an economic calendar, currency correlation, a trade journal and more.
Also, if you’re interested in let’s say trading using Fibonacci numbers, you have to make sure that the broker’s platform can draw the Fibonacci retracements.
Make sure you get a good broker with a good platform. Spend time on investigating the various brokers our there. It’s of high importance.
3. Don’t Start with a Demo Account
Another forex trading tip we want to talk about is whether it’s useful or not to start your trading career with a demo account.
There are benefits, of course, and surely it’s something to consider. You will also read here and there experts and former/current traders suggesting it. However, we at Trading Education, believe that a demo account might be a mistake and here’s why.
The thing about demo accounts is that they can’t provide traders with a real sense of money management and risk management.
You are trading with demo money. Not just that but demo accounts provide you with way more capital than you would otherwise invest.
Consider this forex trading tip when you think of your discipline and developing your risk management psychology.
Trading with demo money won’t really teach you much. On the contrary, it will only give you unrealistic expectations to trading and leave you wondering why things didn’t work out when you started trading with your real money.
Check out our comprehensive article on “Why a Demo Account in Trading is a Big Mistake”.
4. Choose a Strategy / Methodology and Stay Consistent
Here’s another one of our forex trading tricks and tips: Have an action plan and stick to it.
You need to have a clear idea of how you will make decisions and based on which criteria will you execute your trades.
You have to discover your trading style. Some traders use charts to help them determine the best time to execute a trade, along with fundamental analysis, guided by the fundamentals of the economy. There are also traders which utilise only technical analysis.
No list of forex tricks and tips that can make you successful a trader is complete, without mentioning strategies.
There are plenty of strategies out there, suitable for beginners, as well as more experienced traders.
In combination with the proper tools, surely you can draft a potentially successful action plan. Use different techniques for data analysis, decide what indicator to employ and your sources for the preferred analysis (fundamental or technical).
Define the circumstances under which you will buy or sell currencies. Stick to it no matter what but keep in mind that every plan or strategy always has room for improvement.
A trader’s strategy means everything.
Observe the market and follow the news. You should be able to develop a personal trading system, based on rules and habits that can bring you profits.
5. Trends are Your Good Friend
An important forex tip you can follow is learning everything about trends.
Simply put, a trend is a tendency for prices to move in a specific direction over a period of time. The ability to spot trends is an extremely valuable skill. Trends can help you adjust your trading. Trends can also help you make a decision to react before it’s too late and exit a trade on time.
Ultimately, we want to emphasise that success with forex market investments is connected to the trader’s ability to identify favourable trends and position themselves at profitable points of entry and exit. It’s highly advisable to trade with the trend.
However, as a trader, you should know to be alert at any moment. Be ready for a correction following a change in the trend.
Ignoring trends is a mistake. However, we want to point out that the tendency (especially for novice traders) to always jump on the trend bandwagon is not advisable.
6. Accept Losses and Learn from Them
If you’re serious about becoming a trader, you should know that your money will be at risk. Don’t use the money you need for your living expenses and other responsibilities.
Losses are inevitable. There’s not a single trader in the world who has a clean “profit-only” record. Change your attitude towards losses if you want to be a trader.
This is one of the most important forex tips we can give you.
Focus on your trades and future improvement, rather than losing sleep over small losses and constantly counting your equity.
Set a limit.
Let’s say that you have $20,000 in your trading account. Never let any trades lose more than 1-2% of the value of the account.
You have to see the bigger picture. Any successful trader will give you this forex tip. Self-improvement and learning from your mistakes is the way to trade.
Traders with a good record are those who are willing to adopt new trading techniques in order to improve. Commitment to learning and keeping up with the market is of immense importance.
One more thing we want to mention. Some traders who experienced large losses tend to go into the so-called “revenge trading”. They quickly enter trades, based on nothing (not even with high probability setups) and act on their current emotions and desire to pump up those numbers in their account. This results in a loss almost every time.
7. Control your Emotions, Fears and Greed
Speaking of emotions, it’s time to talk about another very essential forex trading tip that will make you successful - control your emotions. One could argue that it’s not much of a trick but rather an absolute must!
You should under no circumstances allow your emotions to dictate your trading activities and carry you away.
Keep your head in the game and stay rational. Your choices need to be dictated by careful observations, calculated setups and realising the true risks involved. Follow your strategies, your knowledge about forex trading and don’t expose yourself to unnecessary risks.
Exercising risk management will help you control your fear and greed and minimise the risks.
A good way to control and become the master of your emotions is to keep a record, especially during the early stages of your trading career.
Mark the reasons why you entered a particular trade. Be honest with yourself and list the emotional reasons for taking that specific action. Were you greedy? Did you panic?
This will help you improve your mental control and learn how to execute actions according to your trading knowledge, preparation and professional experience.
8. Perform a Weekly Analysis / Record of Your Activities
A trading journal is a good forex trading tip not just for beginners but for experienced traders as well.
Objective self-evaluation is very important.
The goal of the trading journal is:
- To monitor the performance of your trading system;
- To showcase if you are consistent with your strategies and techniques;
- To help you self-assess your winning trades;
- To outline the losses and help you understand what you did wrong;
- To list the emotional reasons (if any) behind your trading activities;
It’s your trading journal so you can customise it.
You will be the one who’s going to benefit from keeping a trading journal, so write down what you think you would help you the most in your future trading career.
Successful traders follow this forex trading tip. They go over their decisions and carefully review the path that led them to make that choice.
A trader needs to recognise and understand all the signs that mislead him. Pay attention to the trading times, in particular, and avoid repeating the mistakes.
9. Take breaks
In addition to providing you with a comprehensive list of forex tricks and tips that will make you a successful trader, we also want to recommend taking care of your mental state.
A good forex tip to follow on a daily basis is to take time away from the computer, particularly after long and rather stressful trading sessions.
When you have multiple tabs open on your screen, several data streams to analyse, numbers running all over your screen, endless calculations to consider, you can't help but feel immensely pressured and stressed.
In that case, there’s nothing better to do than walk away from the computer for a while and take some time for yourself to collect your thoughts and relax.
Return to your computer once you can focus better.
Don’t get obsessed with trading, spending hours and hours in front of the screen. It won’t run away.
10. Never Stop Learning
We wanted to finish our article on 10 forex tips that will make you a successful trader with the ultimate advice we can give you - never stop learning!
With each passing day you trade, there’s always a new lesson to be learned. Forex is a dynamic market and you have to keep up.
When we say never stop learning, we mean two things:
- Learn from your mistakes (as previously mentioned), see what went wrong and find out how can you improve it.
- Start analysing forex news, trends and strategies. Don’t neglect your personal strategies that you developed and that got you here but keep in mind that there’s always room for improvement.
Study, practice, study, practice!
Studying does require time and effort but we can guarantee that in the long run, it will all pay off.
As previously stated, Trading Education offers a free trading course, available online for individuals who want to become traders. After completing the course, you can always go back to the educational materials we sent you and see what else you need to work on.
For more information, check out our “The Ultimate Guide to Forex Trading.”
Ultimately, you have to learn how to benefit from the many forex trading tips, strategies and information, tools, articles, tutorials and more available to traders.
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This article explores forex tips that will help you become a successful trader. The 10 tips we gave you cover many aspects of forex trading, including education, strategy formation, emotional intelligence, keeping records and more.
With this list, we also wanted to point out the differences between an average trader and a great one and you should always do your best to be the latter.
To increase your chances of success, you need to adopt several techniques and make habits out of the above-mentioned activities.
The forex market is filled with stress, competition, risks and challenges. However, nothing is impossible as long as you work hard, stay determined and don’t look for shortcuts.
Remember, we at Trading Education are here for you.
Our free online course is available and ready to accompany you on your long but rewarding journey.
You are welcome to apply for our “Ultimate Guide to Forex Trading” and receive the course 100% free.
Today a reader, tomorrow a leader!
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