Forex Trading Tips and Tricks for Newbie Traders
Forex Trading Tips, You may have heard about a lot of people who have made a fortune in the forex market, and now you are thinking of doing the same. You will need to know the forex trading tips and tricks before you get aboard to be successful in this business. The truth is, forex trading is a risky and difficult business, the good thing is that there are strategies that you can learn and use them to your advantage to be successful. There is a lot of information on the internet that can help you understand the right way to carry out the trades.
It is important to look for the right trading strategies as well as sources of information such as technical analyses and forex charts. By doing so, you will be in a position to make informed investment decisions that you will not end up regretting in future. You will also be able to get information about currency trends, and as a result you will know the recurring and profitable trends. You should only begin to trade when you are fully confident that you know how the market works. You should be in a position to make smart choices and take losses in a good way.
When you are just starting, there may be times when you may perform poorly. Do not give up when that happens. It will take some time before you become an expert forex trader, so you will need to allow your skills to develop before you rule out forex trading as an occupation that is not right for you. To be able to understand the ins and out of the forex trading market and avoid obvious mistakes, be sure to use a demo account to thoroughly learn how this market works.
To be a successful forex trader, you will need to have a pre-defined goal. Be sure to stop trading after that goal is reached. For instance, if you plan to make 20 pips in a day, be sure to stop trading when the target is reached. Doing this will help you overcome excessive trading that could result into massive loses. The best thing to do if you want to amass more profits will be to set a new target if you feel like you have beat the one that you had set earlier, for instance 30 pips in a day.
As a newbie forex trader, you should keep it simple. Trying to get fancy by combining techniques or speculating heavily could cause you to make more loses. Instead, you should come up with your own simple trading strategy and stick to it consistently. Since the trades in the forex market happen at a much faster pace, the possibility of losing your entire account over the course of the day is high. So before you enter into a new trade, be wary of your decision and be ready to pull out if you have to.
Are you new in the world of trading and investment? Are you a trader or an investor who has been in the market for a while and yet is still on the red in his portfolio? If yes, then it is a must that you reflect on the mistakes the newbies make.
At the beginning of my trading journey, I lost $10,000 despite spending $20,000 for attending many programs, subscribing to trading tool websites and buying trading and investment books. I kept asking myself: how can I improve my trading and investment? The first step that I took was to review what mistakes I and other new traders and investors made. Here they are:
1. Fail to overcome fear and greed.
The biggest enemies of every trader and investor are fear and greed. Fear prevents people from taking action when opportunity comes. Greed stops them to get out after making small profits or when the market goes against them. Remember that FEAR is False Expectations Appear Real, and that GREED is Grasping Richness in Extreme Excessive Desperation. Newbies should learn to be emotionless while they trade and invest.
2. Follow a trading or investment program or a coach blindly.
Being newbies, they are easily persuaded to follow one theory. If they attend a program with a charismatic person, they might believe he is smarter than them and thus worth to be trusted.
3. Have no clear plan.
When newbies enter the market, most of them have no clear plan regarding how much they aim to earn and when they should get out. By failing to calculate the risk and reward before entering the market, they let their fear and greed lead them to the disaster of losing their capital.
4. Know it all.
Once newbies learn the techniques and approaches, apply them and see the initial winning, they tend to be over-confident. They tend to stick with that winning formula and fail to improve their skills, and never question that this initial winning is only a coincidence instead of a result of a valid formula. Then after losing money, many still insist on their proven approach instead of reviewing and improving it.
5. Lack support.
Many newbie traders or investors have no support from their close friends and/or family members. As a result, they feel even worse when they lose money because of the criticism they receive. Emotionally battered traders and investors make even worse mistakes.
6. Fail to do the homework before trading.
Newbies who have initial success tend to become less diligent in spending time to read, listen to the news and do the fundamental and technical analysis. Market condition changes daily. Spending a few hours to analyze what moves the market is a must before trading.
7. Follow market analysts (experts) blindly.
While reading or listening to the news with various analysts giving their opinions, newbies need to do further analysis instead of blindly following those opinions.
8. Fail to preserve capital.
Warren Buffet has two rules. Rule 1: Do not lose money. Rule 2: See Rule 1. If those rules are held by the world number 1 investor, should newbies consider to put those rules as theirs? Very often, when newbies buy options they let them expire or when they buy shares they don’t buy put for their protection.
9. Fail to sharpen the saw.
No trading or investment program has all the answers people need for their trading and investment. They still need to sharpen their skills by reading books, joining forums and attending courses.
10. Have no trading and investment record.
Recording every trading and investment with the details of reasons of buying and selling them allows newbies to learn from their own experience. Recording their successes and failures is one of important disciplines to succeed in the world of trading and investment.
Life is too short to make all of our mistakes. The cheapest way is to learn from others so that we do not need to experience those mistakes ourselves.
Perhaps you can add to the above lists. However, do not dwell in your mistakes but move on to the next step: finding solutions to every mistake you make. Once you find the solutions, put them into practice. It is not how much you know that will make the difference in your trading and investment but how much you put into practice. Remember that all the great traders and investors were once newbies.