How to Stop Being a Forex Trading Noob
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Are you a beginner in forex trading? Don’t you worry about it. There’s no shame in participating in a brand new adventure and having to start from scratch. But before you do anything, sit back and read carefully what we have to say - forex trading is tricky, it requires knowledge and understanding and it’s not taught in schools.
Unrealistic expectations about forex trading is one of the main reasons why forex trading can be tough, especially for beginners. Forex is not a “let’s-get-rich-real-quick” scheme.
No successful forex trader woke up one day with tonnes of knowledge, experience and the right trading psychology to conquer the market. They spent hours and hours learning and mastering the art of trading, experimenting with different trading strategies, participating in relevant discussions, adopting various trading methods and techniques, trying out different brokers, getting fully acquainted with the technical aspects of trading and more. If you are serious about becoming a profitable forex trader, there’s no shortcut. You have to give your best.
Buckle up! Turning from a forex trading noob to an accomplished and effective trader will require time, effort and dedication. If you are not ready for it, then you’d better stick to your regular 9-5 job.
As mentioned, the most important thing that can make you a successful trader is education. We can’t emphasise this enough!
Risking your hard-earned money without knowing what’s going on will only lead to failure.
Think of forex as another skillset you have to obtain in life. You have to start from zero.
From getting to know what forex is, to understanding currency pairs, managing your risk, analysing the forex market and forming a trading strategy.
That’s when we, at Trading Education, come in!
We have developed a comprehensive, easy-to-follow and absolutely free (yes, you read that right) forex trading course that covers everything you have to know if you want to increase your chances of being successful!
Trading Education welcomes eager and goal-driven individuals who are ready to make money using forex.
Want to know more about it? We can’t wait to tell you.
But before introducing the course we have to explain more thoroughly why beginners can surely benefit from it!
Forex Trading for Noobs
Noob may sound a little bit rude but after all, everyone is a newbie at the beginning of each new chapter in their lives.
The first thing you have to do towards overcoming the status of a “newbie” is getting to know the basic principles and the concept of forex trading.
A successful trader once started his career by learning the very basics, such as what forex is, how it works, what are the benefits, how to properly set up an account, read forex charts, etc. You can’t progress further in your studies and career without knowing the basics.
The meat and bones of forex trading is buying and selling. At its core, the foreign currency exchange market is about buying low and selling high. As simple as it may sound to you, it’s not. The simplest things in life are sometimes the hardest to implement.
Luckily, you can learn everything you need to know to analyse the market and make a well-educated prediction. While trends and values often trace their beginnings to factors we can’t always know in advance, the reaction of the market is often predictable.
Many inexperienced traders are jumping in the market with only their feelings, emotions and high-level of determination. That’s certainly not enough though. Buying and selling should not be based on feelings but rather on facts and knowledge. Traders need to adopt analytical techniques to make good decisions.
Fundamental and technical analysis
When analysing, you have to look at the numbers, charts and take into consideration various other concepts, depending on the type of analysis you prefer - technical or fundamental.
For forex newbies, technical and fundamental analysis may sound complicated but it’s actually not that hard to understand if you enrol in the right trading courses for beginners.
To sum it up, the main difference between fundamental and technical analysis of the forex trading market is:
- Fundamental analysis focuses on economic, political, social and other factors (GDP, inflation, employment rate, etc.) to predict price movements.
- Technical analysts, on the other hand, utilise trendlines, graphical charts, moving average crossovers, etc. of previous actions, to successfully analyse the forex trading market and achieve their financial goals.
We should clarify that it doesn’t matter which type of analysis you decide to use - you may achieve success with both.
Our Trading Education course has a specific chapter dedicated to fundamental and technical analysis. As previously mentioned, you can get our course for free and learn everything you need to know about forex, including how to use fundamental and technical analysis.
Forex Finance for Noobs
Right from the very beginning, forex trading newbies need to understand that no currency values stay constant. Things go up and down constantly. Understanding that is the essence of making money. However, there are other lessons to learn. Your money changes in value and you must adapt to that change. If, after all, the value of money just stayed the same, rich people would just lock up their money and economic stagnation would follow.
What are some of the mistakes beginner forex traders do?
- Trading without proper education:
The first mistake many newbies make is jumping on the forex bandwagon without obtaining the necessary knowledge. Do you really expect to become a successful trader just by opening an account and clicking here and there without knowing what you are doing? If so, forex trading is not for you. Knowledge is power. Become a powerful trader by getting educated.
- Trading without a plan:
Opening up a trade, without having a detailed plan will only lead to the market taking your money. If you haven’t determined when to cut your losses and take profit, how can you suddenly decide those points when a situation arises and all of a sudden you are caught up in emotions? Don’t trade based on your spontaneous instincts. Prepare a risk management plan and do the work in advance.
- Having unrealistic expectations about forex:
You have to realise that you are not going to become an overnight millionaire and retire based on one single trade or win. You have to keep your head in the game and be realistic. Avoid the idea of perfection and get rid of the idea that forex is a “get-rich-real-quick” scheme. Be sensible when it comes to your trading plans, carefully set your parameters and analyse the market’s condition. Think of it this way - if the market managed to achieve 80% of your expected scenario, you can come out as a winner.
- Trading without a stop-loss:
Beginners need to also understand that trading without a stop-loss might lead to devastating losses.
Using stop-loss orders should become an inseparable part of your trading plan. If you cling to the idea that success will definitely come to you and that it’s only a matter of time, keep in mind that it may take a lot longer than what your margin collateral can actually support.
Another mistake trading newbies often make is overtrading. It comes in two main forms - 1) trading time after time & 2) trading too many positions at once;
Trading too often in the market can turn into a high-risk situation. If you always have a position open, you are more exposed to market risk. Instead, focus on trading opportunities where you are certain that you have an edge and a well-designed strategy that can lead to success.
Trading too many positions, all at once, can “eat up” all of your margin collateral - it’s like aimlessly throwing darts at the board, hoping that some might actually stick.
Staying away from market news and updates:
You need to be aware of what’s going on in the market and adapt accordingly. Use an economic calendar to help you keep up with the latest news/events and updates. Your daily trading routing should always include data/event calendar reading so that you’re never caught off-guard and have a handle on what’s going on.
One more thing - when it comes to forex, learning never stops. Don’t for a second think that once you’ve completed your trading course, you are good to go. There are many strategies to explore, many techniques to analyse, news to keep up with, brokers to experiment with, etc. Hunger for knowledge will bring you nothing but profits and successful trades.
You might also like: 8 Questions to Answer Before You Make an Investment
Savers don’t make money but...
Inflation ensures that savings accounts actually end up losing money. With this in mind, it might be wise to start investing. Forex trading is definitely a good start.
Let’s be honest about it, though. Statistically, more than 70% of forex traders lose money. You wonder why? Because in most cases they don’t know what the are doing.
Some people think that the forex marketplace is a gambling rig and count purely on luck. This is perhaps the worst possible way to approach currency trading.
Yes, there are some aspects of forex which can be so chaotic and unforeseen that even the world’s top experts cannot predict them. However, that doesn’t mean forex is all about that.
You need to have the right knowledge to understand how forex works. On a technical level, the forex market is not more difficult than any other financial market out there. That, however, doesn’t mean that it’s easy and it's all about clicking several buttons on your app.
When do you hit those buttons, though? That’s the question that most people can’t answer correctly due to lack of preparation and end up losing their investment.
Don’t be among that 70%.
Learn about what makes the forex market tick and follow the pulse. Get educated if you want to stand the best chance of success!
Trading Education is here for you.
As previously mentioned, our forex trading course is currently available for free to anyone who is serious about becoming a trader.
Our course normally costs £2,500, however, we are now offering it for free, thanks to our partner brokers.
Take a closer look at “The Ultimate Guide to Forex Trading” online course or contact our team for more information. We would be happy to assist you and provide you will all the information you need to become a profitable trader.
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