The global forex market boasts over £2.64 trillion in average daily trading volume, making it the largest financial market in the world. Forex’s popularity entices traders of all levels, form complete rookies to seasoned traders, due to its ease of access and simple format. Its around-the-clock sessions, access to significant leverage and relatively low costs make it an interesting prospect, however it also means it’s very easy to lose money trading forex.
This article will take a look at 5 ways for novice traders to ensure they stay profitable and avoid going into the red. Afterwards, if you’re interested in finding out more about FX trading then visit ETX Capital for more information.
- Do Your Homework
Just because forex is easy to get to grips with doesn’t make it easy to master. Learning about forex is crucial to success in the markets. While the majority of learning should come from experience, a trader should learn everything possible about the forex markets, geopolitical and economic factors that affect a trader’s preferred currencies before diving in.It’s important that you have a basic knowledge allowing you to make decision and adapt to changing market conditions, regulations and world events with an optimal end result.
- Use a Practice Account
The vast majority of trading platforms will come with a practice account, sometimes called a demo or simulation account. These type of accounts allow traders to place hypothetical trades without risking any real money. This allows you to get to grips with the basic format of a forex trade along with getting a feel for the software.
There are few things are as damaging to your confidence or account than pushing the wrong button at the wrong time. Getting to grips with a practice account will save you having to fumble around when real hard cash is on the line. Multiple errors in an order can lead to potentially devastating financial implications so practice makes perfect!
- Start Small
Once you’ve done your homework and spent a reasonable amount of time with a practice account it’s finally time to put your money where your mouth is. No amount of practice can ever prepare you for the real thing so it’s vital to start small when going live. It’s a completely different ball game once real money is at stake, simple decision become much harder and risks have true consequences.
Emotions and slippage cannot be fully understood, respected or accounted for until you’ve started to trade live. Additionally, a plan or strategy that performed excellently when practicing can easily fall short when put to the test in the live market. By starting small, a trader can evaluate his or her decisions and emotions allowing them to gain more valuable real world experience without risking their whole account.
- Keep Good Records
Maintaining a trading journal is a great way to learn, both from your losses and successes. Recording dates, profits, losses, your performance and emotions can be incredibly beneficial to becoming successful. Without a journal and good record keeping, traders are likely to continue making the similar mistakes, minimizing their chances of become profitable and successful traders.
- Treat Trading As a Business
It is essential to treat your account as a business, remembering that individual wins and losses don’t count in the short term; it’s how you perform over time that is key. As such, traders should try to avoid becoming overly emotional with either wins orlosses, and treat each as just another day at the office. Like any business, trading incurs expenses, taxes, risk, losses and uncertainty, along with the fact that like a small business your account will take time to grow and matures. Planning, setting realistic goals, staying organized and learning from both successes and failures will help ensure a long, successful career as a forex trader.
Forex trading can provide a great opportunity to create a little extra cash as long in a quick and easy format. When approached as a business, forex trading can be profitable and rewarding, stayingfocussed, organised, emotionally resilient and determined are all key to a successful career.