Forex Trading Tips for the Beginning Trader

Posted by Deb | Forex | Friday 19 October 2012 12:15 am

Although my trading experience is mainly in futures, I have been recently looking also into Forex trading. One advantage of trading in Forex is that you can start from a relatively small account, and do your first steps in a low-risk manner, trading with small amounts.

Following are few tips I have gathered while learning how to trade on Forex. Most of these tips really apply to all types of financial trading, with their specific twists for Forex trading:

  1. Risk Management: This is one of the most important rules in any trading. Similar to what I have written about risk management in futures trading, in Forex trading you should also always decide in advance how much money you are prepared to risk. Don’t enter a position before knowing this figure in advance, and don’t let your position go further than your risk level.
  2. Know your goals and limits: Be honest with yourself and define how much you expect to make from trading: Is this for you a part-time hobby, or a serious profession? Do you expect to gain a weekly allowance or do you see your trading as something which eventually will let you quit your day job? Know you limits: Don’t get greedy. Don’t let yourself fall into losing all your money in a losing position. Control your ego: don’t add to losing positions.
  3. Don’t spread your trading on too many currency pairs. Start by educating yourself on one pair, and then add a few more. Each currency pair has its own behavior, speed and characteristics. Start with one pair, and only when you feel you understand it well and have enough experience and skills you can move on to another one.
  4. Start small: Begin your Forex career with demo practice. Practice until you feel sure enough to try the real thing. Start your real trading with small amounts and minimum leverage.
  5. Remember: as an individual trader you will never have the inside information or the influence of big corporate Forex traders. Your trading will always be speculative. If you acquire good trading habits, statistically most of your positions will succeed, but you will have to accept that sometimes you will lose.

Good luck in your trading!

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1 Comment »

  1. Comment by GoWest — December 11, 2012 @ 6:27 pm

    Nice set of simple principals to follow and to be aware of as a beginer. The last of which is not as significant when trading in the retail market anyway, but there are EA’s and signal providers that can provide you with an edge.
    GoWest recently posted..MahiFX Top 10 Tips For Christmas – Tip Number 2

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