As a beginner in forex trading, you can easily get lost, confused or overwhelmed with all the information that comes to you on the internet about trading. The best thing to do is to just take it slow, learn how to trade properly with an experienced professional and don’t rush it. This article will talk about several forex trading tips for a beginner to absorb before getting started in the market.
Learn the basics first
Many beginners are trying to jump right into the market with no real background knowledge of the markets they are trading. To build a solid trading foundation, you need to take time to learn about how the Forex market works (or any market you’re trading) and really get a firm understanding before you actually go for it and start learning a trading strategy.
Learn one trading strategy and stick with it
One of the biggest mistakes beginners make, again and again, is changing trading methods too often. If you are using a logical, common sense trading method, you need to really learn it and master it before you do anything else. If you jump from method to method because you think you’ll find some “Holy Grail” trading strategy, you are simply operating on a false hope and being illogical, and you will lose money.
Don’t get overwhelmed
It’s easy to feel overwhelmed with information and trading strategies as a beginner, it happens to all of us at the start. The best way to limit this or avoid it altogether is to find a mentor, someone to learn from and piggyback off their success.
Don’t freak out
This one is big, because most traders, especially beginners, freak out or exaggerate at the first sign of a trade moving against them. This is much more of a problem in live trading than demo trading, due to the differences in emotion between them, but it is a problem and it needs to stop. Remember, a trade moving against you is NORMAL.
Focus on the price action
There was a time once, believe it or not when people traded without computers. It’s hard to believe, but it’s true. How do you think they did that? They did it with price action. They used to read the tape at the exchanges, or they would have the price movements posted up on big boards to read and interpret, and they were interpreting price changes or price action. This method is the only ‘natural’ trading method and it’s been around since the 1700’s when Japanese rice traders invented candlestick charts to predict changes in rice prices.
Perhaps the hardest but most important thing for a new trader to do is to be realistic. Can you make a boatload of money trading the markets? Sure, of course. Perhaps no other profession in the world has as much upside potential as trading. But, that comes at a steep cost; it’s not easy, at least not mentally easy.
You are going to encounter all kinds of mental ‘traps’ and self-sabotage mistakes along the way on your trading journey. Being grounded and realistic is what will keep you on the path to trading success.
Don’t trade a lot
Cliché, as it may sound, slow and steady, wins the trading race and it’s really true. Trading with high frequency opens you up to a world of emotional trading mistakes that will destroy your trading account and your self-esteem.
See Also: Tricks of Successful Forex Traders
Focus on the daily chart
You need to learn how to interpret and trade the price action on the daily chart time frame before you do anything else.
Don’t put stop losses too close
It takes most traders a while and a lot of lost money to figure it out. Thus, you have to place your stop losses at a ‘safe’ distance away from your entry price. If you place them too close, you will get stopped out for a loss before the market really had a chance to move in your favor.
Don’t just jump in with no education
Many people want to risk their money in the market without having acquired any training or trading education. Then later, after they’ve lost a bunch of money, they decide to get some education. This indicates a backward so don’t be one of them.
Save your money first for trading education; learn how to trade properly before anything else and the money will then become ‘attracted’ to you.
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