The worldwide forex market boasts over £2.64 trillion in daily trading volume, making it the largest market in the world. FX entices traders of all levels due to its ease and simple format, from complete rookies to veteran traders, everyone is having a go. Around-the-clock sessions, access to significant leverage and relatively low costs make it a great prospect for earning some extra cash.
This article will take a look at 5 ways for novice traders to ensure they stay profitable and avoid going into the red.
- Do Your Homework
Forex is easy to get to grips with but extremely tough to master. Learning about forex is crucial to success. While the majority of learning comes from experience, a trader should research everything possible about the markets, geopolitical and economic factors that drive currency values before diving in.It’s important that you have a basic knowledge allowing you to make informed decisions and adapt to changing market conditions.
- Use a Practice Account
The vast majority of trading platforms come with a practice account, demo or simulation account. These type of accounts allow traders to place hypothetical trades without risking any real money. This allows you to get to grips with the basic format of a forex trade along with getting a feel for the software.
There are few things are as damaging to your confidence or account than throwing all your money down the drain on your first trade. Getting to grips with a practice account will save you having to fumble around when real hard cash is on the line. Multiple errors in succession can lead to devastating financial implications so practice is imperative!
- Start Small
Once you’ve done your homework and you’ve got to grips with a practice account, it’s time to put your money on the line. No amount of practice can ever prepare you for the real thing so it’s vital to start small when going live. It’s a completely different ball game once real money is at stake, simple decisions become much tougher as your risks now have very real consequences.
Emotions and slippage cannot be fully accounted for until you’ve started live trading. Additionally, a strategy that worked a charm when practicing can easily fall short when reallyput to the test. By starting small, a trader can evaluate his or her decisions and emotions allowing them to gain valuable real world experience without risking their whole account.
- Keep Good Records
Maintaining a trading journal is a great way to learn, both from your losses and successes. Recording dates, profits, losses, your performance and emotions can be incredibly beneficial to in the long run. Without a good journal/record traders are likely to continue making similar mistakes, minimizing their chances of being profitable and successful.
- Treat Trading As a Business
It‘s essential to treat your account as a business, remembering that individual wins and losses don’t count in the short term; it’s how you perform over time that is key. As such, traders should try to avoid becoming overly emotional with either wins or losses, and take both in their stride. Like any business, trading incurs expenses, taxes, risk, losses and uncertainty, along with the fact that like a small business your account will take time to grow and mature. Planning, setting realistic goals, staying organized and learning from both success and failure will help ensure a long, successful career as a forex trader.
Forex trading can provide a great opportunity to create a little extra cash as long in a quick and easy format. When approached as a business, forex trading can be profitable and rewarding, stayingfocussed, organised, emotionally resilient and determined are all key to a successful career. If you’re interested in finding out more about FX trading then visit http://www.etxcapital.co.uk/ for more information.