Written by Lukman Otunuga, Senior Research Analyst at FXTM
Jumping into the forex market (FX), the world’s largest and most liquid market without a solid game plan could be daunting, challenging and in some cases, painful!
Whether you’re a complete beginner or an experienced FX trader, the central goal is to be profitable (consistently) as much as you can. Given how this is the world’s largest financial market, there is surely enough pie for everyone.
There are a wide variety of trading tips that could help you throughout your journey as an FX trader, here are top 10 tips for beginners –
- Hammer down on the basics – know the markets
It is key to understand the important details of the markets before you jump in. Make sure to understand the trading hours, dynamics behind the markets, trading terms, and the list goes on.
- Be disciplined and stick to the game plan
“Discipline is the bridge between goals and accomplishment”. When dealing with the world’s most liquid market, it is key to stick to the game plan even when things may not be going your way. Success does not come without discipline.
- Manage your risk
At the end of the day, trading is a numbers game and making losses is a part of trading. Having a positive risk/reward ratio and understanding the importance of risk management tools such as stop-loss goes a long way.
- Respect the markets
Be prepared for any market volatility, unexpected movements and situations where the market is not moving in your direction. Remember, the market can remain irrational longer than you can remain solvent.
- Pay close attention to your emotions
As Warrant Buffet says, “If you cannot control your emotions, you cannot control your money”. Try to avoid trading on emotions and reprisal after losing a trade. Psychology is a very important part of trading.
- Take breaks when things get tense
There is nothing wrong with taking a break from the screens when things get sticky. Spending time away from the markets to recharge and coming back refreshed can go a long way.
- Take full responsibility and ownership
Take full responsibility of your actions. If you are in a wrong position, don’t blame the markets, news or people. It is key to take ownership as this will empower you. You are in control of your trading.
- Be consistent
A wise man once said that consistency is the key to success. This applies to everything in life beyond trading. Have a plan, follow the plan, review, educate and repeat.
- Review and analyse your trades
It is good practice to review your trades. How do you expect to learn from mistakes if you have no way of remembering previous errors that have been made? Tracking and analysing trades could help you on your trading journey.
- Practise, Practise and Practise
We learn by practice. Even the best traders practise consistently, especially when factoring how markets are constantly evolving.
At the end of the day, trading is a numbers game. And with any numbers game, a long-term view is needed. You need to have faith in your trading strategy and stick to the plan, especially when things do not go your way. Aim for a realistic risk/reward ration and most importantly, accept that anything can happen in the markets.
For more information, please visit: FXTM
Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.
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