For many people, the appeal of making an income from the forex markets is superseded by the fear of jumping into investing. Putting one’s hard-earned money into any investment requires thought, research and due diligence. This is probably more so when it comes to investing in the stock and/or forex markets as the variances, differences
Knowledge is Power
Most importantly, anyone going into forex must put in the time to educate themselves in what they are investing in. A ‘Gordon Gekko’ from Wall Street type knowledge is not required but it is essential that any would-be trader puts in the effort to know the assets and markets they are investing in.
For newbies, the hundreds of assets and currency pairings available to trade, may seem daunting. This is why it is highly recommended to focus the attention and resources on just a couple of assets. This way any trader can master the asset, learn its nuances and generally become better informed, making more successful trades as a result. A good asset to start with is the EUR/USD currency pair which is less volatile than other currency pairings, is highly liquid and has a plethora of investing news dedicated to the EUR/USD pair – the most traded pair of all.
As with everything in life, there is no shame asking for help when it comes to forex trading. Paying for the services of a professional forex mentor who will hand hold during the learning process, will make the learning curve quicker and less painful. Joining like-minded traders in forums, Facebook and Telegram groups will also help break down a lot of barriers and aid making the whole learning process much faster.
Practice Makes Perfect
It’s an old cliché but could not be more correct. Practice makes perfect. Ok, perfection in forex trading is impossible, but practicing strategies and trades will help any trader become better and more profitable as it helps a trader overcome situations and scenarios that they have encountered before whilst practicing.
Money Management is Essential
Forex trading in itself is riskier than many other forms of trading. The fact that trades can be leveraged, sometimes up to 400:1 means the risk is far greater as the trader could lose 400 x more than they invested. For this reason, money management is essential. Never invest money that can’t be afforded to lose and never invest more than 6% of the total investment fund into any single investment. Always spread the risk over different assets and make sure to keep a close eye on all trades and their performance
Control the Emotions
The last point, but probably the most important of all, is to keep the emotions in check. It is far too easy to become emotionally attached to any trade, be they losing or winning. Chasing losses is dangerous, just as deviating from a clear (winning) strategy to increase the earnings. Self-discipline is something that the very best traders have mastered and any novice trader wanting long term success must demonstrate strong self-discipline.