Are you thinking about trading on the foreign exchange market? Perhaps you’ve already started and you’re now feeling a little overwhelmed. Here are 5 of the best trading tips to help avoid expensive newbie mistakes and maximize trading performance.
1. Know your stuff
The Exness signup process has been streamlined recently to make opening a trading account easier than ever, which makes it very tempting to start real-money trading within the first day or two. If you have experience following the financial markets, this is great. But if you are just picking currency pairs randomly, then you might get a negative experience right from the get go.
FX News suggests you read the daily reports that talk about currency price moves, follow big business and political alliances on the world media, and generally live and breathe finance whenever possible. Back in 2016, a trader interpreting a Brexit referendum as bad for Britain could have made a very sizeable profit from a ‘Sell’ order on GBP. Trading with success is much more than just reading charts. It is understanding the world of political consequences and geographic alliances.
There’s lots to learn, and finding the time to study and practice is important. Start reading trading ebooks, watch every tutorial you can find, join social media groups, and exchange trading theories. If you can confidently talk about forex then you are ready to trade it.
2. Lay the foundations on which to build
If you’re an absolute newbie, consider carefully weighing up the pros and cons of each trading account. Once you’ve decided which one is right for you, take the lowest leverage available. Leverage is very important, especially if you’re not planning to make a large deposit. Setting leverage low is a temporary strategy, and you can raise your leverage easily as your confidence and experience grows. If your leverage is high but your deposit is low, your account could get wiped out in minutes if unexpected volatility kicks in.
Remember, leverage allows you to open larger orders. A 1:50 leverage ratio can make a $20 order behave like a $1000 order. Profits can be sizable from even a low funded account. But if you trade in the wrong direction, the smallest price shift will be amplified by the leverage, and you could lose all your equity very quickly. Think about your leverage preference in terms of driving speeds. The higher you go, the more dangerous it gets.
3. Always use the demo account
The Exness demo account allows traders to get familiar with trading in a totally risk-free environment. Explore the trading platform and try new functions or options as often as possible. If you don’t understand it, watch specific tutorials or ask Exness support for help. Set new orders, try a tight Stop Loss and a generous Take Profit, and see how the platform reacts to the market moves. Then try a different configuration.
Even after you’ve made the shift to a real account, keep learning and using the demo to test new trading strategies. The demo account is much more than just a tool for beginners. It is a way to expand your skills and knowledge, and it can help you for years to come.
4. Start low, then grow
Many traders have enormous success from the start, and as the profits begin to grow, they raise the stakes. This usually ends badly. Overconfident traders sometimes get excited about their instant success, trade more than their balance can support, and then a sudden price spike ends it all. Risk of loss is always present, so consider risking no more than 20% of your investment, or even less. This is basic risk management and it's necessary if long-term trading is your goal. Only after your equity increases should you consider raising your investment budget, but do it in increments and stick to the plan.
5. Have a trading diary
Perhaps the greatest tool to ensure a newbie’s growth is a trading diary. Start taking notes while you are training on the demo account. For each day, detail the currency pairs, the direction of the order, profits, and losses. Take note of price moves each day and look for patterns. Add the news releases and the market reactions with personalised comments.
A very good trading tip is to note your emotional state for the day. How you reacted to results, or how your emotions convinced you to break your trading routine or strategy. Read the diary as often as possible, over and over again. You’ll likely learn a lot in a much shorter time with a trading diary.
Trading tips only help if you do this!
The last trading tip is to treat trading as a business. If you were to start almost any venture, you would first have to invest time, then invest the money. Savvy entrepreneurs learn the industry they are entering and all its ins and outs. This is a smart strategy for traders too.
Roll with the blows and learn from the losses. Ride every success and protect every profit. Most of all, enjoy what you are doing, and forex can become a big part of your life and future.
Get a trading account and start targeting profits from CFDs
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