If you are entirely new to Forex trading, where have you been? It’s a great time to invest in Forex, with more than $5 trillion a day traded on the value of fiat currencies around the world against one another. Forex markets are considered the most liquid markets in financial trading, due to the importance of fiat currencies to national economies.
With so many Forex trading pairs and options to consider, deciding where to start can be somewhat daunting. Take it from us, the best way is to start slow and learn the ropes properly before investing sizeable sums of money into your Forex portfolio.
There are two main ways for newcomer investors to get involved with Forex trading: spread betting and CFDs. Both of them allow you to speculate on the value of fiat currencies in their underlying (real) market, making profits and losses based on the actual movement of a currency’s price.
It’s a truly fascinating way to make money, but if you’re a complete newbie, you’ll want to adhere to the following basic tips for forex trading.
Select your Forex Broker wisely
Rule number one: Choosing the right fx trading broker is half the battle. You’ll want to ensure that your chosen broker is regulated and licensed by leading authorities such as the UK’s Financial Conduct Authority (FCA). Award-winning software wouldn’t go amiss either, giving you complete confidence in the platform to focus on executing your Forex trades.
Overtrading is such a common trait among beginner Forex traders. The temptation is too much for some investors that want to be involved in the markets 24/7.
Unfortunately, those who dabble in high-frequency Forex trading from the outset open themselves up to a new world of emotions that can ruin your trading account and wreck your self-confidence overnight. Be selective with your trades and only enter the market when the time feels right, not because you’ve got itchy feet or are bored.
Take your time to understand what moves Forex markets
When you place trades on Forex pairs, it’s important to be aware of the underlying factors that can influence price movements in the markets.
Although inflation and interest rates are the primary factors, everything from unemployment figures and GDP growth to consumer spending can act as a barometer for the health of a particular national economy. Stay tuned to financial data from central banks and other financial news sources.
Be realistic with your trading profits
Rome wasn’t built in a day – and neither was your Forex trading bank. Of course, there are very few professions in the world quite like financial trading that offer such upside.
However, if you’re investing hundreds or a few thousand pounds into the market, don’t expect to double or triple that bankroll in quick time. Slow and steady wins the race.
Try not to panic when the market moves against you
Novice Forex traders tend to suffer from a fear of the market moving against them. In reality, this is often ‘noise’ within the market; it does not necessarily mean your trade is a bad one.
Don’t panic when you see a red screen – manage your position size and set an acceptable stop loss and take your hands away from your mouse. Don’t micro-manage your trades. Let the market do its thing and you’ll find that your profits will accumulate far quicker.
We hope that these tips will help you in your first steps in Forex. Remember that a good strategy will not mean you never have losses, but it will help ensure any losses are few and your overall balance is positive and profitable.