Forex is currently the largest financial market in the world with a daily turnover of over $5 trillion. Forex involves buying or selling a particular currency in exchange for another. Forex market is open 24 hours, meaning that traders can trade both during the day and night. Currency exchange is a process that goes on around the globe. That is what has made forex the biggest financial market in the world. In fact, the total amount of money traded in a single day is more than the GDP of some countries that have large economies. Learning how to trade in forex is quite complicated but not difficult. The reason why most beginners fail is because they have a get rich quick mentality. Just like other professionals, learning the art of trading in forex takes time. However, if you come up with a good strategy and have patience, then you will definitely become a pro with time. Below is a comprehensive guide of forex trading.
1. Learn the basics
The mistake that most beginners make is jumping into the forex trading without learning the trading basics. If you want to become a successful trader, then you need to take your time to know how forex trading works. Learn basics terms used in forex trading, best currency to trade, the best time to trade, the best broker to work with among many others. You cannot learn all this in a single day. It is a process that takes time. So, don’t be in a hurry to start trading, take your time to learn all the basics involved in forex trading. This way, you will make sound decisions when you start placing your trades.
2. Create your own trading strategy
Just because your friends trading strategy is working does not mean that the same strategy will work for you. You need to create a trading strategy that will work for you. All traders what to earn profits from their trades. However, traders use different tactics to earn profits from their trading. The greatest mistake that most novice traders make is following other traders’ strategies. Come up with your own trading strategy and stick with it. If you are consistent with your trading, then you will start seeing positive results with time. On the other hand, if you jump from one method to another just because your strategy did not work and your friend’s strategy worked, then you will end up losing your hard-earned money. Also, don’t switch your trading strategy just because you lost two or three trades. There is no trading strategy that is perfect. Even experienced traders lose some of their trades. Losing trades is normal. Don’t let one or two loses kill your spirit. Just stick to your trading strategy. With time, it will start paying off.
3. Start small
If you do your research well, you will realize that most successful businesses started with small capital outlay. The same thing also applies to forex trading. If you want to become a successful forex trader, then it is wise to start small. Start trading with as slow as $100 then increase that amount gradually as you gain more knowledge and experience. The fact that you are a beginner means that your trading risks are higher. Your chances of losing your trades are more than the chance of winning. If you invest less, then you won’t incur much loss just in case you lose your trades.
4. Choose your broker wisely
The broker that you choose to work with is very important. It will actually determine if you will become a successful trader or not. Remember that forex trading does not have a central market place like the stock market. This means that you need to choose a broker to help you place your trades. If you choose a broker who has a slow trading platform or the platform experiences technical hitch especially during peak trading time, then you are not going to enter or exit trades at prices that you want. This means that you will make loses. It is crucial to choose a forex broker who offers low spreads and high levels of liquidity. The broker should also allow you to execute your trades at prices that you want. Also, choose a broker that is regulated by a relevant body. This way, you will be sure that your money is in safe hands.
5. Open a demo account
Many reputable forex brokers usually allow novice traders to open a demo account. A demo account can help you test your trading strategy before you finally shift to live trading. A demo account allows you trade just like any other trader. The only difference is that you will not commit your money. It is indeed the best way to test your trading strategy.
6. Practice! Practice! Practice!
You can only become a pro trader if you keep on practicing. Remember that practice makes perfect. Don’t let one or two lose kill your trading spirit. Let every failure be a learning experience. It is very difficult to record success on your first try. However, if you continue to practice, then you will slowly start to master some trading techniques that you did not know before. If your broker provides a demo account, use it to practice and perfect your trading skills. True success cannot be achieved overnight. It is a process that takes time and requires good planning, consistency, and practice.
7. Be willing to learn
Forex trading is not based on guesswork as it is usually the case with gambling. If you want to be successful in forex trading, then you must educate yourself about forex trading. Most beginners usually educate themselves only after they have lost a lot of money. Don’t wait until you lose your money in order to educate yourself. Forex trading education is not a one-time process. It is a continuous process that will go on for as long as you continue to trade. Educate
yourself on how to use various trading tools. Also, learn how to analyze the forex market. knowledge is power. If you educate yourself about forex trading, then your chances of being a successful trader will increase greatly.