So you have opened an account with FXPRIMUS and deposited some money to get you started on your trading adventure.
Whether your goal is to make a living trading or simply earn some extra income to complement your daytime job, what lies ahead is not child’s play.
What matters, though, is that you can learn how to trade effectively and turn a profit doing so. It will take hard work, a drive to succeed, plenty of practice, being studious and just a smidge of good fortune.
To set you on your path to success, we’ve drafted a short listicle, highlighting what we believe are some of the most important trading tips for the novice trader.
Of course, this list is not exhaustive. There are plenty of other things you can do to improve your performance as a budding Forex investor.
For now, we leave you with these.
1. Learning is Earning
If you want to be a successful trader, you better hit the books (and the Internet).
There is so much knowledge out there on how the market works, how currencies react to economic, political and social conditions, how history can tell us oodles about price volatility.
It should be your number one priority to soak most, if not all, of it in.
The more knowledge you have, the better prepared you will be to open and close positions, set specific yet realistic targets, implement diverse strategies at the right time, and pick the appropriate currency pairs to invest in, among other things.
So we recommend you scour the Internet for introductory information on the Forex market and build your knowledge base step by step. Learn about technical and fundamental analysis, Japanese candlesticks, the Fibonacci retracement, the Elliot wave principle and a host of other weirdly named concepts that are bound to boost your trading abilities.
A good starting point, for example, could be BabyPips, which puts out a very useful and thorough beginner’s guide to Forex trading.
Remember that education is never-ending. So pull up your most comfortable chair, throw on your reading glasses and get started as soon as possible.
2. Establish a Trading Budget
As a beginner, it’s wise to start off trading conservatively and building up from there.
You don’t want to go all out within your first days as a day trader and see your money go from hero to zero in the time it takes us to type up this sentence.
So before you even get started, establish a budget of how much you want to dedicate to trading and set that aside. This could be money you had saved up for a short holiday or the latest Air Jordans or a PS5. You know, not the money you need to buy food and put a roof over your head.
Find a figure that you’re comfortable with losing, because, until you learn the ropes and don’t feel lost amongst all those funky-looking Japanese candlesticks, the probabilities of this happening are not infinitesimal.
As you improve your trading and start seeing the results of your education and practice (see below), then you may consider putting in more money to the trading mix.
One of the greatest myths of Forex trading is that it’s an easy way of making a buck. This couldn’t be further from the truth. So don’t get overly excited, crack open the piggy bank with your lifelong savings and let loose from the get-go.
3. Practice Makes Perfect
Once you’ve started reading up on the Forex market and how to trade currencies, it’s time to put your knowledge to the test by practicing. Plenty of it too.
Most brokers offer their traders demo accounts where they can feel their way through the MetaTrader platforms, learn how it works and start placing real time trades without having to put down any actual money. For instance, if you sign up with FXPRIMUS, you will receive $50 thousand in Monopoly money to toss around and learn.
Using a demo account can be a great way to refine your trading skills, finetune a particular strategy or style you’re looking to implement, and study the market as it lives and breathes volatility. Basically, demo accounts offer you all of the benefits and features of an actual account, including live trading conditions, without having to deposit a penny.
Once you feel comfortable enough with your strategy and skills following a good practice run with your demo account, it’s time to move up the ladder and go live. For real this time. So buckle up!
4. Take It Easy, One Step at a Time
You’ve now deposited some money into your account and are ready to open your first position as a trader.
Whoa! Slow down, cowboy and cowgirl. There’s no need to hurry.
In Forex, you are much better off being patient, strategic and disciplined. Start off slowly and build from there based on your results, what works and what doesn’t.
But always lay out a plan of action, bring it to fruition and let it run its course to see where it leads you to. You will win some, you will lose some, but each time you will gain additional data on how to best make money trading.
Changing your strategy midway through a trade is a bad habit to develop. Yes, fine tuning your plan following a series of underwhelming trades or based on a shift in your expectations is perfectly fine. But remaining consistent throughout your life as a trader is key.
5. Stop Loss Orders = Your New Best Friends
Since you’re early on into your adventure as a Forex trader, placing a stop loss order on all of your trades is highly recommended.
What is a stop loss order, you ask?
As explained by our friends over at Investopedia, a stop loss order is a great way for traders to minimize their losses as it pre-sets “the particular price at which they would like to buy or sell” and exit their position.
Hence, avoid the risk of losing more than you feel comfortable with by using this mechanism. If the market is moving in the opposite direction to that which you had hoped, a stop loss order will pull you out before it’s too late and you end up wondering where it all went wrong. Yes, price volatility can be a cruel and unpredictable witch.
Generally speaking, the stop loss order should be set so that your losses do not amount to more than 3 and 5 percent of your total capital.
6. Don’t Get Emotional
So you’ve lost some money on your first few trades and you’re starting to stress out. You’re pacing the room frantically, tugging your hair, leaving a trail of locks all over the floor.
For a trader, this is not a good look. You better be even keeled, calculating, steady. Don’t lose your cool. Being emotional as a trader might lead you to impulsive and thoughtless trades that are bound to disappoint.
Things are not always going to go your way. But this does not give you a carte blanche to stomp on your playbook, throw it out the window and improvise a trade or two with the hope (fingers crossed) that you will recoup your losses.
It’s a much wiser move to brush off the lousy trades and stick to the plan you have carefully thought of and laid out to make you some money. Of course, tweaking it as you collect more data and study the market and its movement.
Basically, act logically, check your attitude at the door and be as cool as a popsicle.
7. Design a Solid Trading Plan or Strategy
We’ve covered this point ad nauseum throughout this blog post but it’s worth repeating one last time.
Pick. A. Strategy. And. Stick. To. It.
Becoming a successful trader requires plenty of strategic planning and discipline. Any plan that you design should include your overall goals, profit expectations, how much risk you’re willing to take on, a basic methodology and way of evaluating your trades, and a sound entry and exit strategy. Plus, it should match your personality. Don’t try fitting a square peg in a round hole.
Still, it’s important to be flexible. To a point. If you see part of your plan is not working or your expectations have shifted due to a particular set of circumstances, then tweak or modify it to better suit your overall needs.
Now that you’re equipped with all of this information, it’s time to place your first trade. Crack open your plan and let’s open a position!
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*Any opinions, news, research, analyses, prices or other information contained here are provided as general market commentary and do not constitute investment advice. FXPRIMUS does not accept liability for any loss or damage, including without limitation to, any loss of proﬁt, which may arise directly or indirectly from the use of or reliance on such information.