19 August 2019
20 Things Every Trader Should Know About Forex Trading
Forex trading is a potentially lucrative pastime either professionally or as a secondary venture. However, without the proper preparation and appropriate knowledge, Forex trading can quickly become a minefield for the unprepared. With that in mind, here are 20 things that you should know about Forex trading before considering entering the market.
- Understand your risk profile and the markets. To trade successfully in Forex, you need to be completely comfortable with your goals, expectations and the amount of funds that you're prepared to commit to Forex trading. It is essential that you have a thorough understanding of what you're trying to achieve and how you're going to go about it.
- There is an old saying that goes,” once you have a goal, everything else is in the detail” The detail is the plan. Set out what you want to achieve and when you want to achieve it by. Then, map out how you intend to achieve those goals. Once you are satisfied with the plan, you must work it and stick within the parameters of it. Of course, regular reviews of the plan should be conducted but it is essential that you give it time to work.
- Make sure that you choose a reputable reliable Forex broking service that offers a quality trading platform, excellent customer service and regular informative Forex trading training opportunities. USGFX is renowned for offering these services and more.
- Choose an account type that is suitable for your needs and experience. Accounts with low leverage options are less risky and allow the novice trader to learn the ropes while trading comfortably within their risk profile. As you gain experience and knowledge, it might be worth considering accounts that offer higher leverage opportunities but always be mindful of the risks associated with these opportunities.
- Start by trading in small amounts. It may be prudent to put any profits from these small trades back into the trading account and build your trading portfolio through profit rather than constantly adding more of your own funds to the account.
- Keep it as simple as possible by choosing one currency pair to trade in and sticking to it. Good options here in Australia are to choose widely traded currencies such as the US dollar, Pound Sterling and the Australian dollar.
- If you don't understand it, don't do it. It's better to stick with what you know and be able to back your decisions with sound logic, rather than being involved in something you don't understand which could lead to disaster.
- Don't throw good money after bad by adding to a losing position.
- Keep your emotions in check. There is money involved and it's very easy to be swept away by a variety of emotions ranging from excitement to fear. Remain logical and stick to your plans. Never let your trading decisions be based on emotion.
- Analyse your trades. Keep a written record of all trades and analyse your successes and failures. Every transaction provides you with valuable information about how to trade and what action to take in various circumstances. By recording all trades and taking the time to study them, you will learn from your successes and failures.
- Implement a system that automates your responses to various situations. This is not about using bots, but automating your responses to ensure that you behave rationally when faced with a given set of circumstances.
- Avoid miracle products, like Forex robots that claim to make trading easy and more profitable. If it seems too good to be true, in all likelihood it is.
- Don't over think it. Keep your analysis simple and to the point. A loss is a loss. Analyse and learn from it then move on.
- Try not to trade against market trends - It's a little like betting on the rank outsider at a racecourse. It may succeed occasionally, but the odds and probabilities are stacked against you.
- Gain an understanding that trading in Forex is about managing probabilities. Successful Traders weigh the probabilities to minimise risk and maximise potential profit.
- Be confident in your own decisions. It is your money. While there is no harm in discussing the market with others, ultimately you need to arm yourself with enough knowledge and concrete data to make informed decisions that are in your best interests-nobody else’s.
- Learn about money management.
- Study the markets and understand the fundamentals as to why a currency price is moving in a particular way. The more information you can lay your hands on the better your decision-making process will be. Concrete data and up-to-date information are the keys to making informed decisions.
- Understand that there are few overnight successes in the Forex business. Take the time to learn trading. Keep your initial trades small and use them as a learning experience. Don't give up at the first hurdle. Forex trading can work if you've got the key attributes of determination and persistence.
If you would like to start Forex trading there is no better place to start, then with the USGFX platform. USGFX offer a state-of-the-art training platform combined with an education and information program that is second to none. You can start your journey to Forex trading today by getting a free trading account with USGFX.