The forex market is by far the largest in the world when it comes to value, liquidity, and trading volume. Its turnover is 53 times bigger than the NYSE, and given that it operated 24 hours, the global industry is worth 2.409 quadrillion dollars. Even more surprising is that the forex market is a whopping 27 times larger than the equities market, and 12 times larger than the futures market.
With such staggering statistics, it’s only right that you get a share of the market, right? There’s only one problem with that, though. An average of 70 to 80 percent of forex traders fail by blowing their accounts and giving up before making any profits.
When you get into this, you want to come out as a winner, so we have brought you some of the most realistic forex trading tips to avoid your downfall.
The ultimate goal is to be a successful forex trader, make money, and benefit as much as possible. The question is, where do you start? There are so many aspects of forex trading that go from planning, risk management, strategy formation, money management, and more. Let’s dig deeper into it.
Take the Time to Learn as Much as You Need to About the Market
Have you ever heard the saying that if you’re not willing to learn, no one can help you, but if you’re determined to learn, no one can stop you? Well, this is the first thing you should know about forex trading and one of the most crucial forex trading tips. If you have any dreams of becoming a millionaire overnight or getting rich quickly, putthose dreams aside for a while and get the education that could potentially get you there.
Regardless of your ambitions or trading goals, education is essential when getting into the forex market because it’s the foundation you’ll build your success on. As large as forex trading is, it comes with even greater risks, and winning every trade is next to impossible. You’re going to lose money, but to avoid significant losses, you need to manage risk and execute a winning strategy, and you’ll need forex education to get that.
Learn all about how currency pairs work, how to analyze the market, trading signals, trading instruments, etcetera. It would help if you also learned how to control your emotions and handle failure and stressful situations. Dedicate time and effort into learning this, and everything else will fall into place.
Do Thorough Research Before Choosing a Broker
The next big thing when trading forex is finding the right broker, which is half the battle. When researching brokers, you need to dig deep into their policies, legitimacy, and reviews. Check out independent review sites and forums for honest reviews from existing customers and absorb as much information as possible so you can make an informed decision.
There are many trustworthy brokers out there, such as ctrader brokers, but plenty of them have questionable activities, and the only thing they’re after is your money. There is such a thing as forex broker scams, and they could burn a hole in your pocket.
Beyond that, check whether their trading platform is suitable for your trading personality with the trading tools you need, an economic calendar, currency correlation, a trade journal, Fibonacci retracements if you want them, among other things.
Avoid Starting With a Demo Account
What? Why? We understand why this is questionable because there are so many recommendations out there to start with a demo account, which is why most forex brokers offer them.
But hear us out! Demo accounts do have some benefits because you get a feel of trading, but it may be a mistake depending on how you look at it. You see, you get no real sense of risk and money management when trading with demo money.
Demo accounts provide trading with more demo money than they could invest in their real accounts, and they come out of it with very high unrealistic expectations. When they open real accounts, they lose, get a wake-up call, and end up with very bitter disappointments.
Choose a Trading Strategy and Stay Consistent
One of the best forex trading tips you need to understand is that consistency is key. Discovering your trading style is super important, so decide whether you want to use technical analysis, fundamental analysis, or charts to make decisions and execute your trades.
When it comes to trading strategies, there are so many out there for all kinds of traders. You need to have an action plan by defining under which circumstances you will trade currencies and stick to that strategy. Your strategy means everything, and if you don’t have one, there’s nothing stopping you from failing.
Make Trends Your Friend
One of the top forex trading tips you should follow is learning as much as you can about trends. Trends refer to the tendency of prices to move into a certain direction over time. Having an ability to spot trends will be your most valuable skills because you’ll know exactly when to adjust trades, when to react, and when to exit.
Success lies in being able to identify profitable trends and place yourself at the profitable points. Ignoring trends is a dire mistake most traders make, but jumping on every trend is not advisable either, so learn as much as you can.
Learn to Accept Losses and Learn From Them
The first thing you need to understand to be a successful forex trader is that your money is at risk, and there’ll always be a chance you’ll lose it. Be a responsible trader and avoid using your personal use money because you’ll go broke before you know it. It’s a given that losses are inevitable in trading, so what you need is a good attitude towards losing.
The best thing to do is set a limit for yourself so that when you lose, you can concentrate on future trading instead of dwelling on losses. See the bigger picture and learn from those mistakes, so you avoid them in the future.
Adapt to new strategies once you discover what you have is not working and commit to learning and keep up with the forex market. Avoid revenge trading as much as possible because it almost always ends up in losses.
Control Your Greed, Fear, and Emotions
Controlling your emotions could make you a successful forex trader. Under no circumstances should you let your emotions dictate your decisions because once you get carried away, you make irrational choices and end up losing more. All your decisions should be based on calculated moves, careful observations, and understanding all risks involved.
Risk management will help you with greed and fear and help you make rational decisions at all times.
Always Record Your Activities
Recording your activities and performing a regular analysis will go a long way. Self-evaluation is crucial, so you know what led you to lose and how to avoid those mistakes again. Use the trading journal provided by your forex broker and make as much use of it as possible.
Take a Break Now and Then
Taking care of your mental state is vital for your trading journey. If you choose to day trade, you need to take breaks whenever you can, especially after long sessions. Avoid getting obsessed with trading because the market is not going anywhere, right? Take care of yourself.
Overtrading is seeing opportunities to make money where there isn’t. A lot of forex traders out there deceive themselves simply because they want to reach their goals so badly, which results in overtrading, and eventually losing money. Wishful thinking will not get you success, so avoid trading too much volume or too frequently.
You need strict discipline in this regard to avoid getting into debt. Understand that as a trader, you don’t need many trades to succeed; you only need the correct trades.
Be a Patient Trader
Patience is a virtue, and you need it to be a successful forex trader. Learning will take time, developing a trading plan will take time, developing valuable skills will take time, and becoming a successful trader and eventually rich, will undoubtedly take time. Waiting for the best trading opportunities always takes time, and you need to be patient, so you can enter and exit the market at the right time.
Follow Experienced Traders
In every market, there are veterans that have already learned and are doing very well in their trade. Surround yourself with talent and absorb as much as you can from successful and experienced forex traders so you can better yourself in all aspects. Essentially, keep track of what the big traders are doing.
Find a Trading Buddy
Your journey to successful forex trading will undoubtedly be long, tedious, and sometimes lonely. If you can find a trading buddy who is as passionate as you are about it, it’ll be much more exciting, and you’ll have someone to hold you accountable. Having someone to swap ideas and analyze markets with is invaluable.
Start Your Journey to Financial Freedom With These Forex Trading Tips
We have explored 13 of the most effective forex trading tips, and these apply especially to beginners. Once you implement these tips, you’ll set yourself apart from the average trader and have a real chance at becoming a successful forex trader, which is definitely what you desire.
For more great posts, please check out our website because we have so much more for you to learn.
Interesting related article: “What is FOREX?”