First Steps Before Trading Forex! The Forex market can be pretty intimidating to inexperienced traders. So where does one start Forex?
What are the first steps one takes before jumping into the deep water of Forex? Perhaps there is nothing to do besides jump in and hold your breath! The following Forex guide should answer those questions and comprehensively list all the First Steps Before Trading Forex!
1: Read, Read, Read: It does not matter what kind of trader you are or intend on becoming; you need to do your homework.
You need to read up on the history of Forex, which might seem unimportant and irrelevant to your trades, but it is not. Like you would read up about the history of a stock you want to buy, you should understand the Forex market and its foundations.
First Steps Before Trading Forex Read about the different philosophies of Forex experts. How do they analyze the market?
Understand the difference between the technical and fundamental schools of thought. Next, research the primary differences between the various types of brokers, namely market makers and ECNs. Determine which one is right for you.
First Steps Before Trading Forex: Read about the fundamentals of trading Forex, the big mistakes most new traders make, understand the tips the experts give, and implement them. In today’s world, this task is a lot easier than it was ten years ago. Any resource you need to understand better the Forex market is available online.
Take advantage of this and absorb as much information as possible before trading Forex.
2: Play “Trader”: You have read for tens of hours and are now dreaming in words like leverage, spreads, pips, and Fibonacci; what?
Now, you need to choose a select number of brokers; it does not matter if these are the brokers you intend to trade real money with in an open demo account. Download their trading platform, and start playing pretend.
Open up positions, close them, and analyze the results. You cannot do this for enough time. Trade on demo accounts for as long as possible until you see steady, profitable results and feel confident that you are ready to trade. First Steps Before Trading Forex
It is essential to remember that many brokers offer demo accounts to pull you in and get you trading, so their demo accounts are faster and more responsive than the existing trading platform.
However, just because you succeeded with a demo account does not necessarily mean you will see the same results when dealing with real money.
On the contrary, every trader loses and wins some; you need to learn from mistakes and ensure the “some” you win are more than the “some” you lose.
3: Read More: Once you know that you have reached the stage to begin investing money, you need to do some more reading. This time it is a different type of reading. You might find this reading easier as it is sure to present clear consequences. Now is the stage where you choose how you will trade.
Are you the type of person who feels anxious when a lot of money is on the line? Alternatively, do you know about yourself that your strength is your ability to “keep cool”? First Steps Before Trading Forex
Read all about the different trading options available to you. You can use an auto trading system if you do not trust yourself to control your emotions and keep them out of the trading. On the other hand, you can go the traditional route and choose one of the many Forex brokers offering various highly advanced trading platforms.
No matter what you decide, you need to read. Read reviews of brokers, read auto-trading techniques, read user forums in which traders discuss their experiences with various brokers, and most importantly, visit the brokers’ websites and see whether they speak to you.
4: Jump In: Congratulations on reaching this stage, but here is where you must proceed with the utmost precaution. You researched, traded with a demo, and decided on a broker. Now, you need to become acquainted with the trading environment offered by your broker.
Is their platform downloadable, or is it Web-based? Become familiar with the different screens of the forum and how each helps you in trading—attention to the integrated charts, trading history, and the actual trading screen.
First Steps Before Trading Forex It is recommended also pen another screen with your favorite financial news website. You do not want to trade without knowing the latest events and developments in the world’s financial markets. In the beginning, make sure not to be lured in by the flashing screens offering you to trade with high leverage.
It is tempting to sell hundreds of thousands of dollars, but remember, the greater the power, the higher the risk. Trade small. First Steps Before Trading Forex
First Steps Before Trading Forex Once you make consistent profits in your short positions, increase them gradually. Take baby steps, and whatever you do, do not invest all your money in one trade. First Steps Before Trading Forex
5: Perform a Weekend Summary: You traded for an entire week. Now, step back, and analyze your trades. Use the history tool in the platform where you traded, and determine how your losses could have been prevented or minimized. Did you stick to the plan?
Did you let your emotions get the best of you? Look at the trades you did not open during that week and determine whether you made the right decision.
It is important to remember that a week is an insufficient time slot to reach any conclusions about your trading habits.
However, it is enough time to write down some initial impressions of your trading experiences and learn from them the following week.