First Steps On Forex Or 10 Useful Tips For Beginner Traders

As practice has shown, trading on Forex is quite complicated, but with a competent approach, it is a very profitable occupation. Here you can earn really big money. Even with a small start-up capital (for example, $1,000), you can turn it into millions of dollars in a few years. But such examples are rather the exception of the rule. Unfortunately, most novice traders partially or completely lose their trading deposit. All the reason in the most common mistakes that beginners do. In this article, we will give practical advice to beginner traders, which will help to minimize the risks.

1. Don’t Spread Yourself

In order to start successfully trading on the stock exchange, it is necessary to focus only on one market (for example, USD/EUR) and study it carefully. It is better to start with learning its history, at least in the last 10-15 years, but generally the more, the better. First of all, it is necessary to highlight the main levels on the chart (resistance and support). It is also important to analyze the behavior of the crowd, at a time when the cost reaches these levels. On the basis of these data, it is possible to identify patterns and use them in the future, since it is highly likely that such scenarios will repeat in the future. This is a great job that requires a serious approach.

The next thing that needs to be done is to analyze each group of indicators. Recall that the indicators can be: trend, psychological and signal. Here it is also better not to be sprayed and choose only one indicator from each group. Many traders advise MACD trend histograms to beginners. As practice has shown, it gives the best results, but on a time interval of 60 minutes or more. If to talk about signal indicators, then at the very beginning it is best to use Momentum. With it, you can quickly respond to changes in the market and to buy or sell an asset at the right time. Psychological indicators that can tell what the market will be “bearish” or “bullish” are also very important. The main psychological indicator is the trade volume indicator.

It is worth noting that the change in trading volumes should be monitored at night or at lunchtime. The fact is that a number of the largest market operators do not work in this period. Just at this time, the market loses its predictability, since even insignificant orders can change the trend.

2. Be prepared to make decisions yourself

The fact is that a Forex trader must learn to bear 100% responsibility for his actions if he wants to succeed in this area. If a person who trades on a stock exchange relies not on oneself, but on external factors (signals, advice from reputable traders, etc.), he will most likely lose his trading deposit. A trader must make independent decisions and possess his own trading plan, which he must strictly follow.

3. Learn from your own mistakes

A clear record of all transactions should be kept in order to understand in the future where the error was made. If the trader can detect his own mistake, then, most likely, he will not commit it anymore. The habit of keeping a Forex trader calendar will help analyze your own actions and accordingly upgrade your trading strategy.

4. Differ from the crowd in the market

In order to win this game, you must have an advantage over other participants in the trade. This can only help develop your own trading strategy. Of course, everyone will have their own, but let’s analyze the general recommendations:

When opening a new position, in any case, it is necessary to use such tools as STOP-LOSS and TAKE-PROFIT.

    • When placing “stops” and “profits”, it is necessary to calculate the ratio of possible profits and losses, this value should not be less than 2 to 1.
    • “Stops” should not be too close to an open position. More specifically, no closer than 40-50 pips from the entry point. The fact is that if the stop-loss is too close, say 10-15 pips, then most likely it will work, as it is often impossible to enter at the very peak or bottom.
    • Better not to risk more than 10% of the deposit within a single order.
    • A trading strategy should not be too complicated. A trader should always be able to easily adjust it to current market conditions.

5. Discipline is 99% of success

You can perfectly know the whole theory, develop an excellent trading strategy, but succumb to the temptation and fail. It is all about strict discipline, which must be followed, forgetting fear, greed, and excitement.

6. Profit must grow

It should be understood that profits must constantly grow. Professional traders who have been trading in the Forex market for years know this rule like no other. The fact is that for them, the profit is only an indicator of a correct forecast. With competent trading, profits should be withdrawn only when it is required by the trading strategy. In order to achieve maximum results, you need to allow profit to grow, so it is necessary to take risks. In extreme cases, when the market reverses, the trader will go to zero, but if the trend continues the necessary movement, then earnings can be increased.

7. It is necessary to build a pyramid correctly

If the market moves in the direction desired by the trader and all the indicators suggest that this trend will continue for some time, the open position can and should be increased. But each subsequent increase should be less than the previous one. If you apply this technique wisely, this will allow you to wait out the short-term reverse movement of the market.

8. Trading is a marathon, not a sprint

If you decide to connect your life with trading in the stock market, then you should take this occupation very seriously, since you will be engaged in it for a long period of time. It is impossible to do work that does not bring moral satisfaction. If you do not like to understand the charts, analyze the news background, create new trading strategies, then most likely trading is not your business. A novice Forex trader who tries to increase his trading deposit by 100% or even 200% in a couple of days looks quite ridiculous. Such behavior will lead to failure and unwillingness to continue with a 99.99% chance.

9. History repeats

You’d be surprised, but there are quite a lot of things in the world that repeat in a cyclical order. To use the cycles in trading effectively, it is necessary to know the history of a particular market very well. The larger the trader`s database – the more possibility that he will be able to earn on a certain market cycle.

10. It is necessary to know the psychology good enough

Keep in mind, that trading on Forex is carried out by people, and people have such emotions as greed, fear, euphoria, etc. Open positions of Forex traders can tell about their emotions. The study of psychology is an integral part of successful trading in any financial market. When you learn to understand the mood of people by a chart, you will immediately gain confidence and feel your own superiority over the overwhelming majority of market participants.

Conclusion

Trading in the stock market is very exciting, but very serious and responsible business. If you want to make a million in a couple of months and then drink cocktails for the rest of your life, then don’t even try to start, most likely, you will lose all your money and be disappointed in trading. But if you are set up for a long-term difficult job, then this is a great opportunity to reach a fundamentally new level of income, which, in fact, has no limit.

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