If you are a person that doesn’t like risks, then stay off the forex market. If you are having financial difficulties, don’t have the disposable income to invest, think you will be a millionaire in no time, or trying to make money off the forex market, then there’s a greater risk of losing your money as well because of your situation. Forex trading is highly risky, but when done right, with experience, and with the right broker it can be extremely rewarding.
The first thing to do is: Ask yourself why you are getting into forex trading and what are you trying to achieve.
1. Know Yourself
Don’t go into forex trading with unrealistic expectation…you cannot make $50,000 a month on a $1000 trading account. It’s not going to happen.
2. Stick To The Plan
Successful forex trading happens when traders stick to plans. The most important of them all is sticking to the trading plans which include risk management.
3. Choose Your Forex Broker Carefully
The only 5 countries I will be really comfortable in opening forex trading accounts in are:
- United Kingdom
You want your money safe and easily accessible and these countries have really strong regulations as well as policing of these regulations. The information is also accessible in English.
So you really need to sit down and choose your forex broker carefully. Do your research, check several brokers, set up more than one trading account so you can try them out with any free bonuses they may have for new traders and always, always make the first deposits small so you don’t lose to much if you have chosen the wrong broker.
4. Pick your account type
They say leverage is double edge sword. So you can make a lot of money and also lose your trading account. You need to understand exactly what forex leverage means and learn how you can use to your advantage to make money
The power of leverage in forex is the biggest advantage you can have.
5. Begin with small sums
Don’t start looking for forex holy grail or forex robots or “secret” trading systems. You will come across many of them, and they only have one goal: Make you depart with as much money as possible.
You will lose money to start with until you understand the mechanics of forex trading.
6. Focus on a few currency pairs
If you are just starting forex, then focus on trading a few currency pairs until you get comfortable. As you get better, you can start trading several other currency pairs as well.
The benefit of this approach is that you only have one focus and you are not being diverted to checking trading setups on multiple currency pairs.
7. Trade In What You Understand
Only trade what you know or understand. If you don’t know something, don’t do it until you are sure. For example, don’t trade news if you’ve never traded news before but you read somewhere online that says that currency news trading can be lucrative so you get into it thinking you will succeed.
8. Never Add To A Losing Position
We can not stress this enough: You never, ever add onto a losing position. A losing position simply means that the market does not agree with your strategy, and fighting the market is a losing battle.
9. Self Control
The biggest hurdle in forex trading will be learning to control your emotions. Forex trading success has a lot to do with managing emotions. If you learn to manage your emotions, you will do well in forex.
10. Take Notes
How can you learn and improve yourself if you don’t know what trading mistakes you made in the past? Analyze your trades, good and bad. Take notes of the reasons why you entered a trade, take screenshots of trade setups that you set up. Make notes on the broker you use and the trends which can be identified for your loss/win. Then study them later and learn.
12. Do Not Rely On Forex Robots
Forex robots have their place in the forex market but here’s the thing: if someone says something that is too good to be true then guess what? It is! There are some bots that are really good, but you really need to do your due diligence to find them. You can simply not rely on these bots alone – you need to be active and do a lot yourself.
13. Keep Trading Simple.
It all comes down to only one thing: keep it simple. Having complicated forex trading systems, trying this and trying that will just confuse you. As previously said: start out small and as you learn more, you expand. FOrex is about studying and understanding the markets, trends, and systems you can utilize to profit.
14. Trading Against The Trends?
If you have a huge trading account that can take on the massive risks of going against the current market trends; by all means, go ahead and fight the markets…fight the trend. Be aware that you will most likely lose – the market tends to know what it is doing.
15. Understand Probabilities
In order to be successful, forex traders need to know the basic mathematics of probability. The difference between a “good” trader and a great one is his or her understanding of the metrics and methods for calculating performance and gains.
16. Wait For The Right Trading Setups
If there is no trading setup forming, then don’t force yourself to take a bad trade. You got to learn patience. Be patient and jump on the opportunities when they present themselves. You can not force this yourself.
17. Follow Your Own Judgment
When you trade forex, make your own decisions. You are in control of your decision to buy or sell. You will meet hundreds of self-proclaimed forex experts in so many forums online. But stick to your gut feeling when you read through all these posts and advice. Take advice only from experienced and licensed brokers.
18. Money Management In Trading
You master this and you will make money trading: trading risk management.
19. Study The Markets
Why is this? Because you can connect the dots up and know that a good trading setup is forming or not.
Learn to study price action trading. Learn about how the market fundamentals impact the market and how these are reflected on the chart by price action. And use the price action to trade.
20. Don’t Quit
If you have blown your first €10,000 forex trading account, don’t give up. Start over and learn from your mistakes. Check your strategies and notes and go forward with new and improved knowledge.