Trading forex is an exciting way to make money from the international currency markets. The thrill of closing your first winning trade is addictive, and you’ll be hooked on trading from that moment forward.
However, it’s common for newbie traders to make colossal mistakes that cost them their account. Before you make the transition from your practice account to a live account with your broker, review this list of five beginner trading tips.
The biggest mistake newbie traders make when transitioning from demo to live trading, is a lack of complete education surrounding trading forex.
You need to have a thorough understanding of all of the aspects of a successful trader. Risk management, backtesting, and trade targets are all part of a successful trading plan. If you don’t have a trading plan, then you plan to fail.
Visit a site like EngineForex.com for a comprehensive training program that covers everything you need to know to take you from beginner to advanced trader.
Look Left – structure leaves clues
When completing your due diligence on your trading plan, always look left on the chart that you’re studying.
Structure leaves clues. Use tools like Fibonacci levels to assess the support levels for the currency pair you are interested in trading. The markets move in cycles and analysing charts will help you back-test your trading plan before you place your order.
Use premium software tools
Every technician understands the value of trading tools. Trading tools take the guesswork out of your back-testing, and they reduce the risk of you over or undershooting your trading target.
High-quality tools and indicators may cost a significant amount of money. However, you’ll make the cost of this investment back in the first few weeks of your trading career.
Ensure you have enough bandwidth
If you want to trade forex, you need a connection to the market in real time. A slow internet connection could cost you the trade, so make sure you have a minimum of 10MB of bandwidth available. In forex trading, time is money, and fast line speed helps you execute orders effectively and efficiently.
Trade – don’t gamble
Every trader needs a trading plan, and they need to stick to the parameters to be successful. It’s a relatively common error for newbies to hold onto a losing trade. The thought of losing money is too much to bear, especially if things go wrong and your position is underwater.
This attitude is tantamount to gambling, never hold a losing position, cut it, take the loss and move onto the next trade. It’s impossible for you to have a 100% winning track record, so take the failures as well as the wins.
A final thought – specialize your trading
There are hundreds of pairs to trade in the forex market. You’ll achieve your best results if you choose to specialise in a few pairs, instead of spreading your trades across multiple pairs.
Focusing on three to five pairs when you’re first getting started will allow you to get a thorough understanding of the market and how the charts move on a daily basis.