10 Top Forex Trading Tips

For beginners, trading the Forex market can seem like a daunting prospect, and it might be difficult to know where to start. That's why we’ve compiled this list of 10 Forex trading tips to help get you started. Keep reading to find out what these Forex tips are. 

The information in this article is provided for educational purposes only and does not constitute financial advice. Consult a financial advisor before making investment decisions.

Choose the Right Broker

The first of our Forex trading tips is a crucial starting point and can make a big difference to your trading experience. Rather than settling for the first broker you find, take time to research the different options to help find the right broker for you. 

Amongst other things, make sure the one you choose is authorised and regulated by an internationally recognised authority.  

If you’re wondering what other factors you should consider, check out our article about how to choose a broker.

Educate Yourself

You cannot expect to be successful at Forex trading, or anything for that matter, if you don’t dedicate time to educating yourself.

Find quality sources of information and learn as much about the Forex market as possible. Study the complexities of the market, the different currency pairs available to trade, the risks involved, how to use leverage, and so forth.

Even when you start trading and are no longer a beginner, there is always more to learn.

Create a Trading Plan

Many Forex traders are guilty of being too eager to start straight away without setting out a clear plan beforehand. As the old cliché goes: “failing to prepare is preparing to fail..” and Forex trading is no different.

You can think of your Forex trading plan as a set of rules for you to follow when trading and how you will implement them. Defining these rules beforehand and writing them down can help you stick to them when you start trading.

Amongst other things, a trading plan can help prevent you from overtrading, which can result in a lack of concentration and reckless trades. As you create your plan, set yourself a maximum number of trades you will make per day or week.

Practise on a Demo Account

Before risking money on the live markets, practise on a demo trading account first.

A demo account allows you to trade using virtual currency in realistic market conditions.

This allows you to practise implementing your trading plan, as well as familiarise yourself with your broker’s trading platform, without having to worry about risking your capital. It can also help prepare you for the psychological side of trading.

Start Slowly

When you do graduate to the live markets, start slowly.  

As with any new skill, you need to begin with the basics and go from there. Don’t run before you can walk. 

Don’t be tempted to go straight in with big money trades. Instead, start with smaller position sizes and build upwards gradually from there. Try to learn from every step and don’t increase the size of your trades until you feel comfortable doing so. 

Get Used to Being Wrong

This one is important to hear. Are you ready? As a Forex trader, you are going to make mistakes and, as a result, some of your trades will lose money.

This is inevitable and an unavoidable consequence of trading, even for the most successful traders. As a beginner, you need to accept that you will be wrong from time to time, especially at the beginning.

If your last trade was a loss, try not to obsess over it and don’t let it impair your decision-making process on your next trade. Instead, analyse what went wrong rationally and try to learn from it for next time.

Control Your Emotions

It is important to keep your emotions in check when trading. Make sure you have a clear head and are making informed, rational and unemotional decisions.

Reduce your stress levels by finding the cause of your stress and either removing it or reducing its impact on you. Of course, this is easier said than done, especially after a string of losses, but being able to master your emotions could significantly influence results.

Take Breaks

Something which can help with controlling your emotions is remembering to take regular breaks away from your trading terminal.

Particularly after a long demanding trading session or a string of losses, it can be beneficial to take a break and walk away from the computer for a while. Give yourself some time to collect your thoughts. When you return to your desk, you will hopefully be calmer and able to focus better.

Manage Your Risk Properly

If you only take one lesson away from our list of Forex trading tips, it should be this one. Good risk management is an absolutely crucial part of Forex trading.

Risk management is all about identifying the risks which exist within trading and taking steps in order to limit your exposure to these risks.  

Two practical tips beginner traders can take on board are

• Never risk too much on any one trade; and 
• To trade using a stop-loss.

If you want to learn more about how to improve your risk management, check out our webinar on the topic below:

Be Patient 

Finally, be patient!

Whilst many people may have dreams of becoming a successful trader overnight, the reality is much different.

To have a chance of becoming a successful Forex trader it will require considerable time and effort. Unfortunately, there is no Forex tip which is going to deliver results overnight.

So, be patient and don’t try to rush the process. Instead, take your time and try to enjoy the journey.

Other Articles You May Be Interested In: 

• The Forex Trading Sessions 
• Forex Trading for Beginners 
• The NFP Trading Strategy Guide 

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