A few useful tips to get you started in the world of forex trading.

If you’re new to the forex market, it can be extremely challenging to navigate the potential pitfalls and achieve a sustainable profit. The foreign exchange is certainly incredibly volatile, with some assets prone to a high number of price movements during a typical 24-hour period.

However, an estimated $6.6 trillion is traded on the global forex market every single day, and this betrays the popularity of currency trading and the potential for investors to make huge sums of money.

In this post, we offer some tips on how to successfully start forex trading, with a view to scaling your efforts and achieving a viable profit over time.

Tip #1: Understand the Market

This is arguably the single most important consideration, as knowledge remains a seminal weapon in every successful forex trader’s armoury.

This should also be combined with a keen sense of determinism, which enables traders to understand the underlying laws that govern forex trading and make less emotive decisions.

Fundamental knowledge is also critical, particularly in terms of the structure and organisation of the forex market. For example, this entity is accessible 24 hours a day and split across three geographical sessions (North America, Europe and Asia), while there are also crossover periods that boost trading volumes and potential profitability.

Tip #2: Get to Grips with Forex Terminology

Once you’ve spent a few days navigating your way around the forex market, you’ll know that this is packed full of terminology and jargon that you’ll need to get to grips with.

Two of the most important terms are leverage and margin, while these entities are also interlinked. The former defines the amount of capital that traders may be required to borrow in order to open a particular position, whereas margin refers to your minimum collateral or the deposit that you place down.

You may also here the term ‘demo account’, which is actually a feature offered by the majority of online brokerage firms. This provides a simulated market environment in which traders can hone their strategies in real-time, and it’s wise to make use of this as a novice investor.

Tip #3: Know Your Trading Platforms

This leads us neatly onto forex trading platforms, with almost all orders now executed using online or mobile apps such as the MetaTrader 4.

The MT4 is something of a standard bearer in the marketplace, as this mobile trading app has been in existence since 2005 and boasts incredible levels of popularity and familiarity amongst investors.

However, it’s always important to find the right trading platforms for you, as many offer various technical indicators and analytical tools which may or may not suit your outlook.

Conclusion

We spoke earlier about determinism, which reflects an understanding of the market’s mechanisms and helps you to avoid emotive trading decisions.

On a similar note, you should also strive to manage your expectations and know your limits as a trader, particularly in terms of your margin and the fact that you may ultimately lose more than your initial deposit.

With this in mind, we’d also recommend using key risk-management features such as stop losses, which enable you to automatically close positions once they’ve incurred a predetermined level of loss.

 

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What other tips do you have to share with those who are new to forex trading?