How many times have you heard the word Forex trading, am sure you’ve heard it countless times. Well, this guide covers some detailed facts about Forex trading for beginners.
Forex trading which is also known as foreign exchange trading or FX trading is the conversion of one currency pair to another.
It’s one of the most actively traded markets in the world, with an average daily trading volume of $5 trillion
We hear the word Forex trading more often when we talk about online businesses. However, what is Forex trading and how can you become an expert Forex trader?
To clear the fears of beginner traders, 18 important facts beginners must know about Forex trading business.
Investing your money in any business without good financial education is very dangerous and risky.
This is simply because lack of financial education is one of the 6 most painful ways people lose money without knowing.
In this article, we will be discussing some vital Forex trading facts you need to know as a beginner trader.
18 Forex trading secrets or facts you need to know as a trader:
Here are some notable facts you must consider when starting out in your Forex trading business.
1. Don’t take Forex trading advice from people who don’t trade Forex:
If you’re just starting out on your Forex trading career, never make the mistake of taking trading advice from non-traders.
There are lots of supposed forex trading experts out there giving all kinds of advice on trading strategies and how to trade forex successfully.
Never take Forex trading advice from a non-trader who has zero experience of the Forex market.
Taking advice from such people is completely at your own risk.
Most of them never traded Forex before and as such they aren’t giving you real life trading advice because they lack live trading experience.
Hence, the best set of people to take Forex trading advice are people currently trading on live trades.
Therefore, get connected to live traders, work with them and check out their trading strategies, take their advice and model your own strategy successfully.
2. Have a basic understanding about why you want to trade Forex:
Why do you want to trade Forex? Is it for the money or for the fun of being a trader? Whichever reason you are trading Forex, know why you are trading.
This will help you keep up the passion of being a Forex trader. However over 95% of traders in the Forex market today are trading to secure the cash.
Oh yes, everybody wants to trade the Forex market to make money, however you mustn’t allow greed set in, else you might also loose your investment in the market.
Knowing the main purpose of your Forex trading business in mind will help you set up the right standards to grow your business.
3. Don’t expect to win all your trades, be realistic in setting your trading goals:
Never expect to win all your trades, not even multi-millionaire and billionaire traders do.
Its important for you to know that even the best traders in the world loose trades.
Most of them lost so much money in their early days till they learnt a strategy that works for them.
They failed and failed till they learnt how to succeed and trade profitably in the Forex market.
Its never realistic to win all trades, you don’t own the market and you can’t control the market even though you can study the market trend.
However, successful Forex traders aim at winning over 70% of daily trades to help them stay continuously at profits.
The most important thing here is that your percentage of winning trades should be greater than your loses to keep you profitable in trading.
Even expert traders today still lose trades, so don’t expect to win all your trades, be more realistic with your Forex trading business.
4. Don’t add to your lost trade in a bid to recover lost money:
According to Forex trading experts, it’s advised you make peace with your loses. when you loose a trade, just cut your loses.
It’s normal pressure for newbies to quickly want to recover a lost trade by simply placing a larger amount of money on the next trade in a bid to recover the formal loses.
However, this is not advisable because you also stand the chance to loose more money if the market doesn’t go in your favor.
Therefore, it’s wise to exist from a losing trade on time, some newbie traders keep the trade thinking that the market will start going towards their favor.
The side effect of this is that you might have lost all your trading capital before such trade starts going your favor.
Never allow a small loss which could have be managed properly become a large catastrophic loss to you.
Relax, take your time, carefully study the market and tick to that strategy that works for you.
It’s only a matter of time before you recover all your lost money and start rolling in profits.
Lack of financial education is one of the various ways people lose money without knowing.
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5. Create a long term goal for your Forex trading business:
Its a normal myth for newbies to start expecting quick and instant rewards while trading Forex.
It will be a better plan to aim for a long term goal and work towards it. This will enable such a trader avoid unnecessary pressure for instant rewards.
In the laws of planning and investing, those who plan on a long term succeeds more than those who plan only for a few weeks or months.
Hence, shoot for a long term goal, a well planned long term goal is likely to produce success. It could be a 5 year plan, 10 year or even a 20 year plan.
However, this doesn’t cancel the fact that newbies shouldn’t expect quick success in their Forex trading career, this Forex trading for beginners guide is only a source of advice from expert traders.
6. Learn Forex trading properly from a live trading expert:
Its vital to learn before you go live. You stand the risk of loosing all your money to the market if you refuse to learn from a live Forex trading expert.
This could mean applying for a live course or signing up for an online tutorial.
It’s advisable you do the basics before putting your hands on Pro courses when you’re just starting out your Forex trading business to help you understand the foundations of the Forex market.
Learn and develop good Forex trading strategies as a beginner before you dare to pick up a live trading account.
7. Trade with a demo account:
Just immediately you finish setting up your Forex trading account profile, practice for a specific period of time on a demo account before going live into the market.
This will enable you master your trading strategies and build discipline to control profits and losses.
A demo account gives you the chance to test your trading strategies if it’s good to go or not.
Trade with your demo account as you’ll do with your real money. Every Forex trading beginner must start with a demo account before going live.
There are many Forex trading brokers that offers free demo account, such as Etoro, FXTM, Octa FX, Alpari, Tradeo, Easy market etc. just make your choice and enjoy your demo training.
8. Forex trading business comes with a risk:
Trading Forex comes with a risk, you are only evaluating the market and making plans to place trades to win which sometimes might not be true because the market might not move in your planned direction.
The market will not always go with your strategy which might result in a possibility of loses.
For instance, your strategy may instruct you to buy but the market moves against you and go downwards. Also, your strategy may instruct you to sell and then market starts moving upwards.
Hence, regardless of how good your Forex trading strategy is, there will always be losing trades, just don’t break yourself, this is the risk attached to the Forex business.
9. Plan every trade, be specific, know when to stop loses:
One of the greatest discipline you must build as a Forex trader is knowing how to control your profits and cut your loses when you fall into a wrong trade.
Planning is winning, be intentional about your trading decisions, know when to move it and when to stop it, just be in charge.
Don’t take trades by chance. If you aren’t sure about a particular trade, let it be, patience is a virtue in Forex trading business.
Hence, just wait for your right trade and go for it.
10. Don’t trade with money you can’t afford to lose, never do this:
Never trade with an amount of money you can’t bare to lose, don’t do this.
While this is a constant warning to traders in the Forex market, many people still go into a single trade with a huge amount of money out of desperation to make huge profits from the Forex market.
Such traders feel they don’t need to wait long to hit a jackpot from the Forex market.
Hence, they don’t care about investing time, energy and resources to expertise a working strategy.
This is where greed sets into the Forex market. many traders have lost a lot of trading capitals on trades of this manner.
Its good for you to know that some weeks might be for winnings while other days comprise more of loses. On the long run, just aim at getting more steady wins to remain profitable at the market.
Don’t be greedy, don’t see the Forex market like a paycheck where you can earn weekly, instead see it as a business you need to grow to enjoy it’s dividend.
If you succeed in your Forex trading business, it’s worth far more than a pay check.
11. The cost of your trading activity, how much are you going to spend per trade:
How much will it cost you per trade. All these must be in place and planned to enable you keep on with your trade.
Also, know your desired currency pair to enable you stick to your plan.
Ensure to plan what it will cost you in running your daily, weekly and monthly trading strategies.
Hence, use this Forex trading for beginners guide as a strategic tool in planning your moves to ensure profits are realized than loses.
12. Choose a basic Forex trading strategy:
It’s also very important for you to get your basic Forex trading strategy, test those strategies, analyse the results of those strategit’s, how effective is it and how flexible is your trading strategy?
Why did you choose those trading strategies? Check the risk associated with your trading strategies.
Do your testing strategy and analyse the results of your forex trading strategy, check the effectiveness to know if you will keep it or change it.
Answer these questions:
- What is the level of risk associated with your strategy?
- how will you manage the risk and control it favorably?
- What expenses will you have in your choosing trading strategies?
- What broker or software will you use?
- Is it suitable for you? Hence check your observations and make your final decisions.
13. Always go for low risk trades with good winning returns:
The bottom line here is going for trades with good winning potentials and low risk margin.
Always check how much you’ll gain when you win a trade versus how much you’ll lose when you lose a trade.
I prefer the 3 ratio 1 plan. When you win you get 3 times your money and when you lose you lose just that money.
For instance, if you place 5 trades and you were able to successfully win 2 or more, you’re still safe. This is the best way to trade Forex successfully.
14. Never Trade with a strategy you are unaware of no matter the testimonial:
Just before you pick a strategy from a collague or a trader, make sure to ascertain the strategy. Never trade with a strategy you are not well informed of.
Some Forex trading strategies might seem too real to be true. For instance, i tried strategy ABC for 2 weeks and made a profit of $500.
There are so many people claiming to be Forex experts with various trading strategies, be careful not to buy into a wrong strategy.
15. Choose a trading strategy that is suitable for your trading capital:
Different strategies requires different capital in order for you to be successful.
If you happen to trade with a strategy that requires $10,000 per standard lot then that is what you must do.
On the other hand, if you try to trade the same strategy with $1000 per standard lot then you might not be trading that strategy very long at all because you mightn’t get the required results to be successful in it.
Nevertheless, you might start your Forex trading business with a little capital, understand that the amount of money you are trading with will largely influence your trading strategy.
This is one true fact about Forex trading especially if you intend to trade Forex for a living.
16. Use Forex charts:
Charts help in Forex technical analysis, a Forex price is constructed using a currency pair’s price and time data. There are various charts used in Forex trading business.
Charts helps traders study the market trend on currency pairs which enables them take good trading decisions.
One of such chart used in Forex trading comprises of a conbination of candle sticks showing the market behaviour of a certain currency pairs.
Most Forex trading experts use charts in taking good decisions. it could be studied for hours, days, weeks or even months.
Therefore, implement this chart technique as explained in this forex trading for beginners guide to scale new heights in your Forex trading career.
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17. Have a journal to keep record of your Forex trading activities and plans:
Monitor your strategies, your profits and losses. How profitable is your trading strategy for the first 30, 60 or 90 days.
Having a journal will help you keep good records to know how best to make improvements to keep you profitable in business.
You can also write down your set goals and visit them often to check the attained ones.
This will enable you know if you are making progress or not.
With a detailed record at hand you will know how effective your trading strategies are doing and check your profit and loss margin.
Forex trading for beginners could be a trial and error business, however when you know what to do, it becomes a profitable online business for you.
18. Get connected to a mentor:
One of the fastest ways to succeed at ease in your Forex trading business is to get a mentor. Your mentor is more experienced than you do, he knows what works and what doesn’t work.
You can always reach out to him to get insightful advice to succeed in your trades.
Having a mentor early in your Forex trading career will boost the rate at which you succeed.
If you’re early in your career and they give you a choice between a great mentor or higher pay. Take the mentor every-time, it’s not even close and don’t even think about leaving that mentor until your learning curve peaks.STANLEY DRUCKENMILLER – FOREXTRADING PROFESSIONAL COWORKER OF GEORGE SOROS at QUANTUM FUND
Am sure you got value reading this article, this Forex trading for beginners guide has surely exposed some vital facts and secrets of Forex trading to you.
If you’re just starting out, apply these tips and principles in your daily trades to record outstanding success.
Forex trading is an online business, hence you don’t need to quit your job before becoming an expert Forex trader.
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