The Forex market is the largest financial market in the world, which brings a lot of opportunities for traders. While many have made large profits from Forex, others have not been so successful. In this article we will try to outline the most common mistakes that beginners make and give you some useful tips known to experienced traders for years.
Practice for success There is no better teacher than practice and every successful Forex trader knows this. The best way to practice without any risk is by using a free demo account. This way you can try out the broker’s trading platform and all the features that it offers, to test as many trading strategies as you want. Most importantly, a demo account allows you to make a lot of risk-free trades with different instruments. Once you gain confidence and get acquainted with Forex trading you can proceed with opening a live account and trade with real money.
Recognize your personal style and stick to it
Understanding your personality and how you react when trading is the basis on which you can start building your Forex trading career. All beginner traders have to recognize their own advantages and disadvantages. Do you tend to be easily overwhelmed by emotions? Do you know when to stop? Are you ready to lose sometimes? Why do you want to trade Forex? Answering these simple questions is the first step in self-awareness and will help you recognize and stick to your personal style irrespective of the circumstances.
Choose the right account type When opening a live account compare all the account types offered and choose one that best meets your financial and trading needs. LiteForex offers six account types, which have different trading conditions and minimum deposit requirements. If you are a beginner you might want to choose an account with a small deposit requirement, such as the Lite or Real account, and once you gain experience trading you can switch to another type. For the more experienced traders, look into the NDD or STP accounts which have a higher deposit requirements and great trading conditions. Check out all six account types offered by LiteForex.
Start with a single currency pair If you are just beginning to trade Forex it is a good idea to concentrate your efforts on one currency pair. As you probably know, some of the currencies are more active than others. Some excellent examples are the pairs EUR/USD, USD/JPY, EUR/CHF and GBP/USD. You can select one of the most traded pairs until you master it and then move to the next level.
Be patient Patience is a virtue and most successful Forex traders can confirm this. Do not rush your trades and stick to your initial plan. Sometimes even the best strategy can fail if you are inconsistent in your actions. That’s why you don’t want to let small setbacks stop you or make you act irrationally. Just be patient and it will pay off.
Manage your risk wisely Similar to any other investment you make in your life, Forex trading carries risk. Therefore you should define the amount that you can sacrifice without hurting your budget. Remember that you do not want to risk more than you can afford. Risk management trading tools such as limit orders and stop losses will help you prepare for the worst scenario while you expect the best outcome.
Learn the Forex language The specific financial terms that are used in Forex trading may seem difficult in the beginning and that is a good reason for you to learn them before entering the market. LiteForex has a great Forex education center, with a tutorial, articles, and a glossary with the most commonly used technical terminology. Read enough educational materials so that you feel comfortable with the Forex terminology and a good understanding of Forex.
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The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.