Once you have developed an interest in Forex trading, the next step is to learn how to trade Forex successfully. There are a number of ways you can learn Forex trading online and in this article we will show you the best methods when learning to trade, as well as provide you with five vital tips for starters. We’ll begin by explaining why education is so important at the start of your journey into Forex trading.
Importance of Forex education
The Forex market is constantly changing, so traders need to be able to understand the ups and downs of this market. There is no patterned formula or set of rules to guarantee success in Forex. Instead it is a combination of many things all at once – and to succeed in this market traders need to be patient, talented and mindful. Understanding this is the first step in Forex learning.
Being able to talk about ratios, charts, indexes and trading should be be regarded as a skill to aspire to when you start to learn about Forex trading. In the beginning it can be tempting to rush through your learning, but it’s important that you step back, take the time you need and advance at a sensible rate. You need to be able to constantly evaluate your performance, and understand the reasons behind your wins and losses. Now let’s see why should you learn how to trade Forex the right way.
How to trade in Forex
Below are some tips that can help you become a successful trader in the Forex market. These tips will help you understand how to trade on Forex, especially if you are an absolute beginner.
In order to earn maximum profit, you must acknowledge the risk and safety zones in the market. For this you have to be self-aware. The first step in becoming self-aware is to make sure that any capital invested and risk tolerance to Forex trading is at the right level. In short, you have to be able to analyse your aims and objectives and trade accordingly. This is the most important thing to note on how to trade Forex for beginners.
Invest what you can bear
One of the best tips for any new trader is to start with small amounts and only increase the capacity of your account with your profit – not by further deposits. You don’t have to invest a large amount to earn profit – you can maximise your investment however small it is. By starting out small, you cut down the risk of heavy losses when large volumes of cash are involved. This is an essential part in understanding how Forex works and how to trade Forex online.
Start with a single currency pair
The currency trading world is complicated due to the unpredictable nature of markets, different characters and tenacities of its participants. It is difficult to be a perfect trader in the financial world. For this reason, it advisable to begin by focussing on a single currency pair – preferably one you are familiar with and can easily update yourself on. It may be better to choose one which uses the currency of your nation, or one which is widely traded. This will make it easier for you to learn Forex market trading.
Control your emotions
If you find yourself becoming concerned about the market and effects on your trading, don’t follow your emotions. Giving into feelings of panic, greed or excitement is a sure way to ruin your trading career. Instead, maintain a logical and practical approach to your trading. All traders should have a predetermined trading strategy to follow, so make sure you follow it. Don’t suddenly change your mind halfway through a trade based on emotion – you’re more likely to make irresponsible decisions which can cost you greatly. Whilst this tip isn’t a direct answer on how to trade Forex, it can certainly help you avoid costly mistakes .
Keep a record
We learn from our mistakes, and this can be deeply implemented in Forex trading. Keep a record of your successes and failures and any key mistakes and positive steps that you have taken in order to achieve your desired profit. This is an important step in learning how to be successful in FX trading.
The previous tips are the first steps that you need to take in order to understand how to learn Forex trading and become successful in the Forex market. Following these tips will certainly make your trading experience better. Now let’s take a look at how a beginner should approach Forex trading.
Learning Forex trading – a beginner’s guide
The first thing that you need to do when it comes to trading Forex is to understand what you want to achieve. In deciding what you want, you have to be realistic. Set yourself a realistic and quantifiable goal. This could be something like: achieve 20% annual return on investment, earn 5000 USD of profit, get a total of 100 pips per month or something similar. Whatever you decide, your goal should also be easy to measure. What is also important is to set a goal that can be achieved over a long time frame – it is recommended to set an annual goal to achieve rather than a monthly goal.
Once you have set your main trading aim for the year, it is now time to start learning how to achieve it. The best way is to identify what resources are available to you. This may include the size of your deposit, the amount of time you are willing to spend on trading, and amount of available funds you are willing to spend on trading-related matters (software etc). Once you have a clear vision here, let’s move on to the next step.
As you now know what you want to achieve and what you are willing to put on the table, it is time to make an action plan. This action plan should include the currency pairs you are planning to trade and the amount of trades you are going to commit to. This is of course difficult without having a proper strategy in place, so first prepare a template of your action plan, and then move to the next step.
Practice makes perfect – and yes, this is essential in order to understand how to trade Forex successfully. Start off by opening a Demo Account. When you use a Demo Account, the market conditions are nearly the same as on the Live Account, yet all of the trading is done risk-free using virtual money. Once you have a Demo Account, you should try out a number of different trading strategies to see which one provides you with the best trading results. Paper trading is essential, as during this process you can analyse your skills and see how your strategy could be improved. By trading a lot you can identify the best time frame, the best currency pairs and the most suitable trading strategy. This is a lengthy process that can take sometimes months, but it is definitely worth doing. Once you feel confident in your trading skills, return to the previous step and complete a trading plan with the data you collected during paper trading practice.
Once you have a direct plan of action, it is time to actually go ahead and start working towards your trading target. Set up a Live Account. deposit the same as what you practised with on your Demo Account and start trading according to your trading strategy and plan. You can of course modify your strategy and the rules you use, yet this should only be done when there are no open positions. This is one of the main rules to keep in mind. Many novice traders find it difficult to let losing positions go and they will try to modify their rules so they can try and turn a losing position into one that breaks even. This is a common mistake and it should be avoided. Changes in the plan are only possible upon performing a careful analysis and only when there are no positions involved in the trading.
These steps that we have addressed in this article are what you need to follow if you want to become successful in the Forex market. Being a successful trader takes a lot of effort and you have to be willing to go through a lot of trial and error. That being said, if you do succeed the benefits are more than worth it.
This wraps up our guide on learning how to operate on the Forex market in a successful way. We wish you luck and should you require any additional information on Forex trading please visit our education section .
Risk warning:Trading foreign exchange or contracts for differences on margin carries a high level of risk, and may not be suitable for all investors. There is a possibility that you may sustain a loss equal to or greater than your entire investment. Therefore, you should not invest or risk money that you cannot afford to lose. You should ensure you understand all of the risks. Before using Admiral Markets UK Ltd services please acknowledge the risks associated with trading.
The content of this Website must not be construed as personal advice. Admiral Markets UK Ltd recommends you seek advice from an independent financial advisor.
Admiral Markets UK Ltd is fully owned by Admiral Markets Group AS. Admiral Markets Group AS is a holding company and its assets are a controlling equity interest in Admiral Markets AS and its subsidiaries, Admiral Markets UK Ltd and Admiral Markets Pty.
All references on this site to ‘Admiral Markets’ refer to Admiral Markets UK Ltd and subsidiaries of Admiral Markets Group AS.
Admiral Markets (UK) Ltd. is authorised and regulated by the Financial Conduct Authority. (FCA Register No. 595450).
Admiral Markets (UK) Ltd. is registered in England and Wales under Companies’ House. Registered Number 08171762. Company address: 16 St. Clare Street, London EC3N 1LQ, UK.