The Best Forex Trading Tips – Especially for beginning traders it’s very important to really understant that trading is about patience and following rules, instead of dreaming about the millions you want to make in a short period of time (after all, trading is not a get rich quick method).
There is NO best trading strategy. The best Forex Trading Strategy for you is one that fits for you. You must find something you fully understand and feel comfortable with. Ignore what works for others and find something that works for you. Finding a profitable method is not that hard. Sticking to it over and over is.
Core Principles to Understand
There a re a few core principles to understand as a trader that will help you survive in Forex market:
1. You can’t predict the future.
Is there anyway to know what a central bank president will say during a speech? Or maybe what a super famous investor or hedge fund manager says during a random TV interview?
Do you know when the next terrorist attack will hit and cause risk aversion?
How about a natural disaster like an earthquake or tsunami?
The list of unforeseen market moving catalysts is infinite and when they happen, they can rock the markets and your forex trading system.
Understand that this is part of trading and the best you can do is be prepared to limit your losses if they occur.
Be ready to have your world rocked. And I don’t mean that in the way you think it means.
2. Data doesn’t move the market. Humans do.
There will be times when data or market themes do not mesh with price action.
Why is that?
Maybe the outcome was priced in ahead of time? Maybe forex traders weren’t focused on the data that was released? Maybe there was an institution covering a huge position that was on the wrong side of the market?
Would all players in the market react to an unforeseen catalyst the same way?
Whatever the price behavior may be, the decisions that lead an forex trader to take action aren’t always logical or congruent to the information out there.
When you multiply this by the millions of players with different goals/strategies and different sized trading accounts, it becomes impossible to tell where the overall market will go every single time.
You can’t quantify or calculate human behavior and unknown future events into an elegant mathematical equation to completely get rid of risk.
There will always be some level of uncertainty and there will be times when you will be on the wrong side of a currency market move.
Actually….there will be MANY times when you will be on the wrong side of a currency market move.
Perfectionists should probably stay away.
Beginner’s guide to forex trading tips
Trading is more art than science. Just as in artistic endeavors, there is talent involved, but talent will only take you so far. The best traders hone their skills through practice and discipline. They perform self analysis to see what drives their trades and learn how to keep fear and greed out of the equation.
Beginner’s guide to forex trading tips:
- Manage your risk – without proper risk management all you’re doing is gambling and we all know how that ends.
- Do not go against the market – it’s a lot bigger than you and it can remain ”irrational” and “wrong” a lot longer than you can remain solvent.
- Make sure you pick a good and reliable broker. This should be obvious, but it is amazing how many people would invest their money with brokers who are not regulated or who are borderline bucket shops. Research the broker you choose very well, because you may not see your money again if you choose the wrong one.
- Do not rush into trading – take the time to learn it, practice on a demo account and get very well acquainted with technical analysis. This will pay off later on down the road. Education is paramount to Forex success.
- Keep your emotions in check – It’s important you do not give into fear, greed and overconfidence, as these will cost you your capital.
- Always remember that the money you invest is at risk of some, or total loss. Never invest money you are not prepared to lose.