Many people look to the Forex markets for possible financial salvation. A lot of novice traders have their dreams of success crushed by the cold realities of Forex trading. It doesn’t have to be this way though! Master the nine Forex principles outlined below and you can wade into Forex trading with real confidence.
- Get a Demo Account First.
The smart place to start your forex career is with a demo account. You simply can’t learn everything you need to know by researching theories and market history; you need to get a feel for the pace of live trading.
- Practice Intelligently.
Just because your demo account doesn’t involve real money, don’t take it lightly. Make an effort to execute trades just as you would with money on the line. Evaluate each trade both before and after you make it. Always look for the learning opportunity: What can this trade teach you?
- Take Notes.
Forex trading calls for lots of fast action. While your goal should be to cultivate an ability to trade instinctively and effectively, in order to get there you have to start slow. Note taking is an excellent way to keep from getting ahead of yourself, and it also gives you a tangible record you can review as you learn.
- Always Research.
One advantage of starting off your Forex career with diligent study is that it prepares you for the realities of the business: you’ll never be done learning. By getting used to constant learning now, you’ll be prepared for the frequent research you need in the future to stay on top of your game.
- Be Cold.
Emotions can come into play in any financial transaction. The thrill of success, the shame of defeat, the hunger for profit – these are all feelings that can lead you astray when you make Forex trades. Train yourself to be dispassionate and always evaluate your trades rationally.
As you move into live trading, you need to be even more careful than you were when you were taking your first experimental steps. Don’t risk your money on any trade that’s just an idle fancy. Only place trades you’re sure you want to get into. Know the potential risks and rewards every time.
- Follow the News.
More than most financial markets, Forex reacts to world events. Before you advance too far in your trading career, make a habit of following the International news. Economic and political events around the globe can have a huge influence on the way the Forex markets behave.
- Chart Literacy.
Forex trading involves wrangling vast amounts of information. This in turn means that graphs and charts are extremely important. A good graph lets you grasp market trends quickly and accurately, but only if you know how to read it. Make sure you understand all of the charts and graphs you’ll be looking at regularly.
- Financial Limits
Successful Forex trading often involves leveraging extremely high margins. Don’t lose sight of the real totals you’re putting on the line; keep in mind that earning a few dollars may involve risking hundreds. It’s not hard to make intelligent trades, but it’s also easy to make dumb ones if you forget about what’s at stake.
Forex trading can be a risky proposition for the poorly prepared investor. If you build your overall Forex strategy around the principles outlined here, you won’t be poorly prepared. Let them guide you safely and intelligently into the wide world of the Forex markets. If you keep your head and remain open to learning, you’ll find the profits you’re looking for.