5 Forex Tips for Beginners
I can understand why the forex market is such a popular investment alternative. Start-up costs are very low, the schedules are very flexible, and the potential profits are eye-catching. The sad part is that 95% of all the traders will end up losing money. I want to share some of my experience with you; I hope this will help you become part of the few who profit with currencies.
1. Trade only on large time frames.
Trading on small time frames is very profitable for some; it’s profitable for your broker, for companies that sell signals, and for some system sellers. Short-term price movements are mainly random; there are a million of variables involved that have nothing to do with the main trend. No one can predict with enough consistency what the prices will do on short-time periods.
Successful forex traders use daily and weekly charts, mainly, for their trading decisions. Personally I only take positions once a week.
2. The secret of the rich: Money management.
There is a big difference between gambling and investing. If you don’t want to wipe out your account, like 95% of the traders, you need to add sound money management rules into your trading decisions. If you learn nothing from this article but this you will be a better trader than most.
3. You need a plan
People can’t expect to trade without a plan and be profitable; unfortunately most do. You need to know what to do on every case scenario. How much to buy or sell? When to enter the market? When to take profit or loss?
Keep your emotions under control, don’t let the occasional set-back affect them. The key, to become a successful trader, is to be bold, have cold blood, and trust your trading rules.
5. Losses are a normal part of the trade.
Drawdowns are those times, in your trading career, where your losses add up, making you doubt your system, or worse, yourself. Learn to love your losses or, at least, accept that they are part of the deal. You should expect the occasional drawdown on your account from time to time. As long as losses are under control you have nothing to worry about.
I know trading the forex market can be a rewarding occupation; you need no special skills or natural talents to become a successful trader. Anyone with the determination and the right information can learn how to trade. The only thing you need is a good mechanical system, sound money management rules, and above all self-discipline.