Even if a trader doesn’t have lot of knowledge about the market at first, it can compensate by learning continuously. By being patient and accumulating information, he can improve at a steady pace until he has what it takes to consolidate his profession as a Forex trader.
Reading our top 10 forex trading tips and tricks will set you ahead. Forex Bonus Lab has collected and filtered tons of tips just for you!
Top Forex Tip: Knowing oneself and adhering to a plan
A trader must know what his risk tolerance is and how much capital is he willing to invest at first. The risk tolerance must not be too low, because the trader is liable to lose a lot of money, or too high, because in that case the trader will not initiate enough trades and his profits will not make up for the paid spreads. A middle point is a good place to start and from there the trader can adjust his behavior depending on his style and the market conditions.
The trader also must examine himself and find out how much time is he willing to dedicate to Forex trading, because a schedule that is too short may spell doom for his future career. Also he must know how much time he is willing to invest in his learning, because that complements and reinforces his trading activity. He also should know if this will be his primary occupation or just a pastime to generate extra income. In the first case, he should dedicate more time to it. He should have a clear picture about all those things before commencing his trading program. Browse through nine more forex trading tips!
Second Best Trading Tip: Choosing a trust forex broker
Many brokers are deterred from their progress because they made a mistake when choosing a broker. All of their hard work and all their gains may be for naught if the broker is disreputable and does not treat the traders fairly. A trader should avoid brokers that allow slippage, do requotes or engage in other dubious practices. All the offers advertised by the broker must be verified; if they sound too good to be true, they probably are in some cases. Most brokers cater to all kinds of trader, but a customer must know if the facilities provided by the broker are designed for new traders or experienced ones and plan accordingly. They should also make sure that the broker provides a trading platform they feel comfortable with and also they should know how fast are the execution orders cleared.
The customer service also must be organized in such a way to communication in different ways with the customer and in different languages. If they only offer support in the English language that means they haven’t put much thought in international clients. Mostly support is done in numerous languages, but you need to check whether the broker is offering the support in your language. We have provided many tips on this already, yet the more you know the better.
These brokers also provide a wide variety of accounts and traders should pick the one that offers them the best features. For example, new traders might want a coaching feature, while experienced traders might want advanced charting software. Also even if the brokers offer extra high financial leverage, that doesn’t tell us that the traders have to make transactions with the leverage set to maximum every time because that will put them in a losing position in most cases.
The traders should adjust their leverage in such a way that they are not liable to lose more than 2% – 3% of their account balance on each transaction otherwise things may get quickly out of control. A mini account can also facilitate the transition from a demo account to a real account, because a new trader will be more attentive to what is going on in the market, but he will not be in a position to lose a great deal of money because of the small balance associated with the mini account. Earning profit on a mini account, even close to an insignificant sum may do a great deal by psychologically preparing the trader for the challenges ahead.
Forex Trading Tip And Trick 3: Keeping things simple at the start
The best way to approach trading at the start is to begin with small sums, because trading large sums does not guarantee great profits. It is important for the trader to accomplish a percentage of winning trades and this is more important at first than the total amount. Moreover, it is highly recommended to increase this deposit by earnings rather than making frequent deposits if this means that those deposits will be emptied on losing trades. A better alternative to adding money to an account without a plan is switching back to a demo account.
The trader also must focus on only one currency pair to keep things simple. That currency pair must consist of currencies that the trader knows well, such as the currency of his nation. Another good idea is choosing a currency that is widely traded and one that is examined at length in the financial articles along with predictions about its development. Such a thing will protect the trader from information overload and allow him to control the number of variables he is working with.
Simplicity also brings clarity of vision can help the trader to deal with the challenges ahead by helping him make decisions in a reasonable timeframe. Over-explaining and rationalizing too much over past mistakes can hinder the trader. He has to identify only the most obvious factors that led to his gain and loss and then to keep going. Using only just a few objects or indicators at first can help the trader grow by making sure he can assimilate all the information presented to him. Don’t neglect, this is one of the most vital forex trading tips!
Tip 4: Doing what you understand
A trader must have a very good reasoning for initiating the positions and he must discern from the factors that are relevant and those who are not. If a position is chosen that is against what the market observers think it will happen, the trader must know how to argument his choice and list all the reasons why he took that position. The market observers are not always right; they too obtain a percentage of winning trades and also of losing trades and knowing when to listen to them and when to follow your own calling is of paramount importance. The trader must not base his trades on rumors, but on a detailed and elaborated reasoning constructed over time.
It is important to note that nobody has clear information about the evolution of a currency over a specified interval of time; that is influenced by a lot of factors, such as supply and demand, foreign trade or other factors that are quantifiable or not, so that the end result is unknown. A number of educated guesses and predictions can be made but those aren’t always correct. It is important to separate the factors that can be determined by those that can’t and to act accordingly. This is one of the most important tips!
Tip 5: Keeping your emotions aside
A trader must be as rational as possible when initiating a trade and to keep in mind that emotions such as greed, excitement or fear have no reason to be present during the orders. Despite the fact traders are human, they must find a way to control these emotions and not let them influence their judgment. Only plans based on facts, trends and indicators can contribute to the success of a trader, while emotions may hinder his progress. That is why traders are advised to start on a demo account, then move to a mini account and only then open a real account: they need to adjust to the platform and to grow accustomed to the risk environment, by being slowly exposed to more risk and learning to deal with it.
For example, greed may determine him to add to a losing position, which is a bad idea. When a trader loses on a position, then it is important to take the loss and move on, not being stubborn to make every transaction a winning one by adding money and by waiting inordinate amounts of time for the price change direction. That can only enlarge the losses and is not a valid strategy.
If the reasoning that determined the opening of a position was faulty, then it is unreasonable for a trader to think that this reasoning may bring him profits in the future, so he should understand that taking the losses and moving one is a thing that all traders do, because that puts them in a position to win in the long term. Ready for five more forex trading tips?
Tip 6: Taking notes
The things that can contribute the most to the development of the trader are not fundamental and technical aspects, but rather his past experiences. In order to benefit the most from them it is important to record past transactions as well as profits or losses, stop-loss levels, exit points and price evolution. The more detailed these notes are, the better. This can be a helpful learning tool because the trader can see his past trading behavior and modify it if he has clear information about the past. He can also make a better distinction between winning trades and losing trades and see what determined these results if he has jotted down all the parameters regarding them.
Most of the top market analysts also take notes, because they also think they can benefit from it, even if they have a great understanding about the market. New traders have even more to learn from this, making this principle one of the most important.
Tip 7: Automating the trading activity
Some traders would argue against EAs being one of the forex trading tips. Well, this is not about EAs or robots. This is related to having a plan and controlling the emotions. A trader must treat all the transactions the same way and to have the same attitude when he is about to make a transaction. By following the detailed plan he needs to give the same importance to all the transactions and not to act on emotions.
Right after a trader has learned the fundamentals, he will be in good shape to automate all his decisions without giving them a lot of thought. It is not to say he will not think of the transactions he is doing, but because he has previously examined similar transactions, he will be used to the process and be more effective. Making automated trades contributes greatly to controlling the emotions, which is obviously very useful.
Automating the transactions does not refer to using forex robots or other untested products, because most of these wonder methods are scams. It is indicative the fact that the creators of these products don’t use them to get rich, but they make money by selling them to others. This goes a long way to show the real usefulness presented by these products. The decisions even if they are automated must belong to the trader based on his market perception and reasoning, not to be made by items of dubious origin.
Tip 8: Following the trends
An obvious way to approach trading is to wager that the trend will maintain its course over the period of time the position is maintained. Going against the trend is best suited for advanced traders. Generally there is no reason to go against the trend unless indicators show that a change of trend is possible. Even so this movement against the markets is riskier than just betting on the trend and it tends not to be so profitable in the long run.
Expectations that the price level will cross a strong support or resistance level are most of the time unreasonable and trading with this expectation may spell disaster even in the short term. It is important to note that Forex is about probabilities. If it’s more likely that a price will rise rather than go down, then a long position will determine more earning on average and should be chosen. Probabilities that the price will pass support or resistance levels tend to be lower, so a good strategy must incorporate those price levels.
Tip 9: Studying money management and the market
During his professional development it is important for the trader to study as much as he can and try to apply what he has studied in the market. After he has mastered the topics regarding risk taking, position opening and exiting points, he should be in good shape to accomplish everyday activities regarding trading.
After that he can try to put in practice more refined strategies, like fundamental and technical studies and see if this increased degree of difficulty helps him. From there he can customise his strategy and choose the combination of indicators that works best for him. A trader should not try to put these studies in practice at the beginning, because trend examining and emotional control will serve him better at that stage. Neglected by many forex traders, this is one of the most needed forex trading tips for advanced traders.
Top 10 Forex Trading Tip: Not giving up
Even when things don’t go his way, respecting the strategy constructed previously and showing great determination and perseverance can help a trader succeed in the long run. It’s true that great skill can only be obtained over a period of time and in the meanwhile the trader must be patient and try to be informed with market news and fundamental and technical studies until he has amassed enough knowledge to make him a successful trader. By making calculated risks and not overextending, he can be in a position to profit from a favorable turn of events while not being seriously affected in the case of a downturn.
Competent money management can prevent the trader from being in a very bad spot. Even top market experts have started from somewhere and by examining what worked for them and how long it took, the trader can make a comparison with his current situation and future possibilities that lie ahead.
Take a note of these forex trading tips! They are gold.
As you have learnt 10 trading commandments, we invite you to try out 30 USD no-deposit bonus by XM and see how well you can stick to these forex trading tips.