Forex Trading Tips That’ll Help Beginners Hit the Ground Running
Let us start by saying this: Forex trading is not a scam! The absence of understanding the economy and the persistence of those who are current traders lead people to believe that Forex is another pyramid or get rich quick scheme.
Although Forex trading is now becoming a trend, the Forex market dates back to the 1940s with a modern exchange market beginning during the 1970s.
What many fail to realize is that Forex trading is much like the stock market with one vital difference. So, what is that difference, and what is Forex trading exactly?
Keep reading to learn the answers to your questions plus beneficial Forex trading tips for beginners.
What Is Forex Trading?
Forex trading, or foreign exchange trading, involves trading to profit on movements in the market price between foreign currencies. Although trading on the foreign exchange market can lead to great profit, the market is volatile which can carry some risk.
Foreign exchange traders must learn information about currency exchange rates between various foreign currencies and U.S. dollars.
Traders can profit from the movements of foreign currencies going up and down in value in the market. Forex market runs 24 hours a day, 5 days a week which makes it a liquid market.
Not many know that the Forex market is the largest financial market in the world, with a higher daily traded volume than the popular New York Stock Exchange.
How Forex Trading Works
Live Forex trading is similar to buying and selling other securities like stocks. However, there is one main difference. The trading done in the Forex market is completed in pairs.
The four most common types of Forex pairs are:
- Major pairs
- Minor pairs
- Exotic pairs
- Regional pairs
Major pairs include seven currencies making up 80% of Forex trading. That means these currencies are most commonly traded. As a beginner trader, you’ll probably be trading them too.
The major pairs of currencies include USD/CHF, USD/JPY, EUR/USD, and GBP/USD.
Minor pairs are not traded as much but often feature major currencies against each other, not including U.S. dollars, like EUR/CHF, EUR/GBP, and GBP/JPY.
Exotic pairs are currencies traded from small or emerging economies and might include GBP/MXN, EUR/CZK, and USD/PLN. Regional pairs are those classified by region. For example, AUD/SGD or EUR/NOK are regional pairs.
When you make a Forex trade, you are selling one currency to buy another. If the currency you buy moves up compared to the currency you sold, you make a profit.
Forex Trading Tips for Beginners
Beginning with the fundamentals is the best place to start learning about Forex trading. Compared to other options, Forex trading is a safer method of trading.
Yet, because there is still a risk, it’s important to learn the right techniques. The following are the best tips on Forex trading for beginners:
You can educate yourself by doing research online, but taking courses and learning from experienced traders is key to making an investment.
Forex Signal Room is one of the top places to learn from Master Traders through online courses and hands-on development. When you join the Premier Forex League, you reap all of these benefits:
- Newbie course
- Live trading with Master Traders
- Trading tools
- Negotiated Broker Commissions
- Forex Playbook
- 24/7 support
- Demo recorded sessions
- Video and PDF training
- Live chats with Master Traders
Educating yourself also involves studying the markets and what can affect currency pairs. Before risking your own capital, it’s important to fully understand what you are getting yourself into.
Choose the Right Broker
As mentioned before, Premier Forex League offers negotiated broker commissions to benefit you. Choosing the right broker is essential because certain platforms offer additional trading features while others do not.
Before making a decision, take time to learn about the transaction rates, security, and legitimacy of a platform you are interested in trading with. Consider all of your options because there are various brokers available.
There are also Forex trading apps to choose from that make trading more available to smartphone users who want to trade on the go.
Stick to the Plan
A trading plan involves different components and will be based on your goals, but any great trading plan includes:
- Risk tolerance level
- Profit goals
- Evaluation criteria
Having a plan in place can help you make rational decisions when it comes to placing trades. If a trade does not fall within your parameters, don’t place it.
Along with a trading strategy, you’ll want to prepare a risk management plan. The higher the risks, the bigger the reward, but don’t carelessly trade to get awarded.
When you reach a certain number of losses, it’s time to stop trading. Set strict rules for yourself to avoid losing all of your capital.
When you opt for services with Premier Forex League, you can keep up with live trading events that offer Q&A sessions with the experts to help you come up with strategies and more.
Keep up With News and Trends
The rates on the foreign exchange are affected by news about a country’s economy. Negative economic news can decrease the value of one currency and vice versa.
Staying up to date with the news regarding the country’s currencies you are trading is going to help you make a profit. You’ll notice that economic news affects currency over time and not right away as no currency is severely volatile.
There are also tools you can use to forecast market movements. Premier Forex League offers trading tools and Forex signals to help their foreign market trading members.
Beginners often get excited by the idea of making a return on investment and fail to understand the market conditions completely. If it is your first time trading through this market, or at all, it is smart to start small.
Test the waters with small capital to help you develop your personal trading strategy. Once you’ve become more experienced, you can increase your trade amount and engage in multiple deals at once.
Forex is not a get-rich-quick scheme so make sure the money that you trade is set aside specifically for the purpose of trading.
Stay Emotionally Detached
Not getting emotional about your capital is easier said than done, but if you want to stay profitable, you need to stay rational.
Experienced traders have the gift of staying calm even after a series of losses. There are natural ups and downs of trading that every leveled trader is going to experience.
Revenge trading is a common term for those who cannot keep their emotions in check. This form of trading seldom ends well.
Revenge trading involves trying to get all of your money back on a losing trade in one shot. Instead of doing this, stick to your plan and make your losses back a little at a time.
It’s better to lose once than have two major losses under your belt.
Premier Forex League offers meditation and breathing exercises as part of their package to help newbies and all other traders avoid the problem of emotional instability. Match rational thinking with proper risk management and you’ll be golden.
Create an Open-Minded Strategy
As a beginner, you’ll probably test out multiple strategies that could work for you. Over time, you’ll concoct your own strategy based on your budget and principles.
After finding a strategy that works for you, don’t stick to it if it is no longer working. Staying open-minded about the market conditions is key to adaptability.
Traders who are just starting out might get stuck in their own ways by focusing on what they think the market should do instead of reacting to what the market is actually doing.
Having a strategy is essential, but if you cannot edit your plan, when necessary, you’ll fall victim to the volatile market.
Explore Different Currencies
Unless you are already familiar with most foreign currencies out there, you are bound to stick with what you know. Trading with currencies you are familiar with is a good strategy for every beginner.
Once you get the hang of Forex trading, you don’t want to limit yourself to certain currencies. Explore your options and keep an eye on up-and-coming economies for gains.
Is Forex Trading Right for You?
Forex trading is done through the foreign exchange market, a safer market compared to others. As the largest trading platform on Earth, anyone can become a foreign exchange trader.
However, not everyone who tries to trade with this method will find success. To make a profit with Forex, you must do the research, get educated, and follow the additional Forex trading tips above.
If you jump in headfirst as a beginner, chances are, you’ll drown. At Premier Forex League, we aim to help traders of all experience levels. Contact us today for questions about our membership or join now.
Remember to focus on the process and not solely on the profits!