Forex trading started gaining popularity with the advent of retail brokers and a low cost of entry. While some look upon the forex market as a scam, my opinion is different.
I think there are some big benefits in trading the spot forex market especially if you are new to trading. Forex is an efficient market that allows you a low cost of entry into the trading business. While the get rich quick stories are more fable than fact, if you are in trading for the long haul, you should throw get rich quick away now.
Here are 5 tips to help you with your forex trading.
Start with a demo account. Every broker with its weight in coal will offer you a forex demo account to try out their platform and practice trading. Take advantage of this virtual paper trading account until you are ready to risk real money.
Start small. It’s a great benefit that many brokers let you open an account with very little money. That allows you to avoid serious trouble. If losing $50 breaks you, you are probably in the wrong business. While you won’t get rich funding accounts with $50 or even $500, it’s better than paper trading because it gives you the actual feel of risk, as well as making or losing real money. There are other ways to trade with limited risk, such as binary options and financial spread betting if you are in the U.K., but nothing is as easy as it sounds. Make sure you do your proper due diligence and understand the risks involved with these.
Stick with a handful of crosses. There’s no reason to watch every single cross in the forex market. Focus on the big boys like EUR/USD, USD/JPY and AUD/USD and AUD/JPY each day, and add in whatever catches your fancy when you do your beginning of the week analysis. By getting the feel for how just a few of the crosses trade, it will make expanding to other crosses that much easier.
Shut out the noise of news and concentrate on the charts. Because forex has such big volume associated with it, it can be very technical. Like stocks and futures, avoid the noise that news brings with it and focus on your favorite chart patterns and indicators. Your personal volatility level will likely subside greatly.
Put in the work and stop looking for the short cuts. Learn how to trade and not rely on robots and super touted systems. These are almost as bad as the super gurus tat turn a molehill into a mountain, only to lose it all because they were “distracted”.
Let me know what you think of these tips by leaving a comment below or contacting me at tinymjs at gmail dot com.