Forex trading can be a profitable venture, but you can lose money if you do not spend your time learning the ins and outs of trading. Thankfully, beginner forex traders can learn the art of trading by following the time-tested tips and lessons mastered by expert traders over years of trading.

Here we mention 10 forex trading tips that beginners can adopt to improve their trading performance.

Choose the right broker

A right forex broker can provide access to different types of trading instruments, currency pairs, CFDs, and other derivative contracts in the forex as well as other financial markets. Many brokers offer advanced forex trading platforms, such as Meta Trader 4 while some brokers have their own proprietary trading platforms.

So, before choosing a forex broker, you should read its detailed reviews, regulatory and licensing status, fees, and trading platforms, among other attributes. Your forex trading success partly depends on the capability and reliability of your broker and the trading terminal.

Try Just2Trade, we are an award-winning multi-asset broker. 

Define your trading goals

Before starting trading, you should answer why you want to start trading in the forex market. Earning money is the goal of every trader, but you should define specific financial goals, a monetary monthly profit goal, or a certain profit percentage each month you want to achieve. For example, if you want to achieve a 10% return on your capital, you can then adopt a trading strategy to achieve this goal.

This is helpful when it comes to supporting your mental health during bad trades, when everything seems impossible you can refer back to the milestone you’ve achieved.

Choose your trading style

Traders adopt different trading styles that best suit their trading strategies and goals.

For example, day traders open and close their trades on the same trading day and never leave their trading positions open overnight into the next trading day. Swing traders, in contrast, take longer-term trades than can last for one day to several days. Day traders capitalize on small, short-term price movements so the profit per trade is usually low, whereas swing traders usually aim to capitalize on large price movements in the medium term.

When you understand your trading style, you would less likely to feel anxious during your trade. This will eventually allow you to have more certainty whenever you’re in a trade and creates good mental conditions.

Strategizing your trades

You need to learn trading strategies that work in different market conditions. Generally, advance traders prepare 3 strategies based on the market structure as follow trend strategy, against trend strategy, and sideway graph strategy.

While there are countless trading strategies that supposedly work, you can learn and master some of them. Sticking to only a handful of strategies can bring clarity to your trading and thought process. 

Learn fundamental and technical analysis 

Fundamental analysis in forex refers to analyzing the impact of different economic, social, and political factors on the value of a currency. Technical analysis involves analyzing price charts of currency pairs to find patterns and predict the future direction of the price. As a forex trader, you need to be well-versed in conducting fundamental and technical analysis so that you know why a particular currency has been making the move and what could be its next possible move. 

This will be extremely helpful and profitable when understanding the fundamentals. There are traders specifically trading based on it, and some of them even only trade based on news.

Test trading strategies on a demo account

You can use a demo trading account to test the trading strategies you learn.

Most brokers allow you to have a demo trading account so that you could become familiar with the trading platform. If you are able to confirm that a particular strategy works on most occasions, you can consider adopting the strategy in your real account. 

Just2Trade offers a free demo account that mimics real market fluctuations.

Maintain a trading journal

When you maintain a trading journal, you write all the important points of your trade, such as the entry point, exit point, reason for entering and exiting the trade, and the lessons you learned from the trade. Maintaining a trading journal allows you to identify and fix your common trading mistakes and can help you become a disciplined trader. 

Journaling allows you to answer your own doubt, and better improve or avoid your current strategy’s weakness, which eventually increases the likelihood of being profitable in this profession.

Adopt risk management techniques

Every trader should adopt risk mitigation techniques to protect their account from significant drawdowns. Expert traders always set their stop loss points while placing their trades. Also, they don’t risk more than 1% or 2% of their accounts on a single trade.

Risk management techniques aim to keep losses within tolerable limits, allowing traders to be in the game after a wrong move or even consecutive losses.

Control your emotions while trading

Trading psychology is another important factor that determines your trading success. Although it has a strong relationship with risk management, it is also a strong factor to point out.

Many beginner traders are unable to cope with the pressure when a position goes against them. As soon as a trade goes against them, they panic and keep hold of their losing positions with the expectation that the position will somehow reverse. But they end up taking a loss large enough to wipe a significant portion of their account. 

Keep abreast of market developments 

As a forex trade, you need to keep abreast of the market developments as markets react to important new events. This is also part of analyzing the fundamental but crucial to point out alone as the market changes constantly and it affects the overall economy, affects supply and demand, which affect currencies.

Conclusion

Forex trading can be tough as only a small percentage of retail traders make money on a consistent basis. To be amongst the small percentage of traders, you need to learn as much as you can about forex trading and ensure that you come out as a better trader with each passing day. The tips we mentioned in the article can significantly improve your trading. 

Have fun trading!

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