Have you just started forex trading? As a beginner, you might sometimes be confused, but you’ll get into it once you have enough skills. Nowadays, it’s easier to trade, and you can also learn a lot online.
You may already know this, but forex or foreign exchange is the buying and selling of currencies that allows investors to make a profit through the changes in value. It’s the most common type of investment since a lot of people are aware of what it is.
If you already know the basics of forex trading, you might also be interested in other ways to trade, such as the contract for differences (CFD). Usually, beginners opt to trade forex through the contract for differences (CFD) since it has leverage. Essentially, it’s trading without owning the underlying assets.
So since forex tends to be volatile, you won’t have to invest all your money in a single position. But aside from that, there are other ways to trade forex effectively.
If you need some tips, don’t hesitate to check the list below!
1. Set your goals
Whether you’re a professional or a beginner trader, having a goal is essential. You should at least set your goal for the day or for the week to monitor your progress. For instance, your goal for today is to open 5 to 10 positions. Once you’ve achieved your goal, you can move on to a higher goal for the next few weeks.
When you set your trading goals, it doesn’t have to be solid right away. Think of it as a trial-and-error experiment. Your goal today may not be as effective as your goal for tomorrow, but the good thing is you’re getting to know yourself. But once you find out which goal suits you, you can explore more specifically.
2. Look for a trusted broker and platform
Does your current broker and platform organise smooth transactions? If yes, then you don’t need to look for another. On the other hand, if you’re still looking for a broker, make sure that they’re decent and trustworthy.
If you have friends who are also into forex trading, you can ask them for recommendations. However, you can also look for online reviews and blogs which indicate the top forex broker you should try.
But even if you find the best forex broker, you also need to look for their platform and see if they offer the features you need. Once you find everything you need, you can try a demo account to practise before you trade for real.
3. Choose the currency pair
As part of your forex trading preparations, choosing the right currency pair to trade is also essential. As mentioned, the level of volatility of the forex market is unpredictable. So if you don’t pick the best currencies to trade, all your efforts might go to waste.
For starters, you can stick with the most popular currency pairs, which include USD/EUR, USD/JPY, and GBP/USD. Did you know that USD is the base currency? It’s agreed that USD should be the base currency for forex trading since the US has the most gold and they have the ability to pay debts.
4. Practise and stay updated
As mentioned, practising on a regular basis can help you improve your trading skills. It’s similar to doing other things. If you do something repeatedly, then you’ll get a pattern and try to focus on that. Once you’ve managed to create a way to conquer the pattern, it can help you trade effectively.
But aside from the regular practise, you should also stay updated on the current news and events that might affect the currencies. Additionally, if you want to stay updated, you should also look for the most credible sources. That way, you can come up with the best strategies based on these changes.
5. Create strategies
Do you have some strategies in mind? When you create a demo account, find time to test them out. Since the trades in demo accounts are based on live trades.
On the other hand, if you still haven’t come up with trading strategies, take time to create a plan. For instance, you can trade regularly through your demo account. Of course, you’re going to trade multiple times a day. Keep track of your wins and losses, and create your strategies based on the results.
But while you’re creating strategies, you can also look for other traders with the same pattern as yours. It’ll be helpful if you have a basis that you can just alter based on your needs.
Are you ready to trade forex? Since it’s one of the most popular investments, you can find much information online. Let us know if you have any more tips for beginners by leaving a comment below!
ABOUT THE AUTHOR:
Aliana Baraquio is a web content writer at FP MARKETS, a global Financial Technology services Foreign Exchange (Forex) and Contracts for Differences (CFD) broker established in 2005. She also loves reading about interior design and home makeovers.