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Top 4 Forex Trading Tips for Beginners
Many beginners struggle to learn forex and the majority fails for different reasons. Some of them jump from one strategy to another while others blow up their accounts by taking big risks. Whatever the reason, a newbie needs to learn trading the proper way.
In the foreign exchange market, 90% of traders lose money. One reason behind this is not related only to their skills in trading, but also because of their poor risk management.
In this article, we are going to present our 4 best tips to learn forex trading in the right way.
- Learn about the foreign exchange market (forex)
Trading in the currency market is not easy, but it is not complex either. Knowing how to sell or buy a currency pair is not a forex education.
You need to learn from a comprehensive and organized forex course where you will get in-depth knowledge. Many traders today use materials available online.
For example, there are a lot of forex websites dedicated to teaching forex, like Latest Forex Tips. These websites are often managed by experts and they provide efficient educational materials.
There is no shortcut in the journey of becoming a successful trader. No ‘Holy Grail’ formula can be found in the foreign exchange market. Don't waste your time looking for a perfect strategy because simply it doesn't exist.
The best thing to do in order to improve your skill is to take a course.
The best forex course should include the following:
- The first step of any forex trading course will teach you about the basic things of forex (like pips, spreads, swaps, leverage, lot or volume size, trading software, economic news and events, central banks etc.), then teach you about currency pairs, their correlations, chart, candles and much more.
- It teaches you a trading strategy, without an effective plan, you won't succeed no matter how much you know. A good forex trading strategy always focuses on how to filter (analyze) and minimize the risk of a trade. It would tell you where to trigger a position, where to put a stop loss and where to take profit. And if the trade is worth risking at all.
- Finally, it will tell you how much to risk and how to improve your trading skills, psychology and how to control your emotions.
- Choosing your best forex broker
To choose the broker that best suits you, you must take into account a certain number of criteria. Indeed, each broker has different advantages and offers in terms of:
- offers like welcome bonus, number of currency pairs offered, minimum deposit, minimum lot size, platforms offered, spreads, etc.)
- the brokerage firm like regulation, approved Banks, head office, presence of offices, number of years of exercise ... etc)
All these questions and criteria are to be taken into account to find an online broker that best meets your requirements.
To test your criteria and compare the offers of the various online brokers, we invite you to consult the following list:
- Regulated forex broker - It is important to open a trading account with a regulated forex broker.
- Trading platform - Choose a broker that offers a forex and CFD trading platform with which you are most comfortable.
- Spreads and brokerage fees - Finding low spread forex brokers is good, but watch out for different hidden feed. A spread announced on the broker's site does not necessarily mean that you will have the same spread.
- Order execution quality and Slippage - Having low spreads is a good start, but having orders executed at the asking price is even better.
- Trading limits: if you are looking for the best forex broker, know that a good broker does not put limits on the trading styles of his clients.
- Fund security - Choose a forex broker with a segregated bank account. This protects your fund in case of a broker's fraud.
In addition to the criteria stated above, make sure that your broker offers different types of trading accounts, open leverage to choose the one that suits you, and also the customer service.
- Learn the basics of trading strategy and master it
When you learn about trading strategies, pick one strategy and stick to it.
Newbies in forex often jump from one strategy to another looking for the ‘Holy Grail’. Nonetheless, they find themselves consuming money and effort without actually learning anything.
All strategies have pitfalls; therefore, choosing one strategy and mastering it can save you a lot of money and time. Still, a good trading strategy has to focus on risk and reward ratio. A solid trading plan is a set of rules for filtering a trade to minimize risk and maximize profit.
The best thing to do for a newbie is to start by learning the basics of technical analysis. For example how to draw trend lines, support resistance. Then, you move to price action, which is an advanced version of technical analysis.
Once you master price action; then, it is possible to choose a strategy.
There are a lot of strategies like Elliot Waves, Gann.... Each strategy has its foundation, all of them are good, but no one is perfect and give guaranteed results.
Also, you need to adopt a trading style. There are for example scalping, which is fast where a trader opens and closes multiple positions a day, swing, which take long terms....
The trading styles are different based on the personality of the trader and his experience.
Learning a trading strategy doesn't guarantee success without successful money management.
- Risk management in Forex
The quality of a professional trader is measured by the quality of his risk management. Risk management is the number one factor in Forex trading. You will stay in the business long if you master its rules.
Nothing can save your account if you don't follow a disciplined risk management method in your trading. There is nothing absolute in trading, trading is all about probability and risk.
Indeed, trading is both a science and an art. If you need to master it, you need to dedicate time and effort. You don't need only to master one thing, but the whole package. it's like making a cake, you need to know the ingredients and how to prepare them the right way. Similarly, in forex, you need to learn, to choose a good broker, to master a strategy and to manage your risks.
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