If you have ever dreamed of trading on the forex market, your interest will probably have been drawn by the margin-based returns and the huge levels of liquidity within the market. Make no mistake; it is the unique and rewarding nature of the marketplace that underlines it appeal, while daily trading volumes in excess of $6 trillion were recorded during September 2014. With these points in mind, it is little wonder that the forex market is often a novice trader’s first port of call.
This market is also a volatile and risk-laden entity, however, where margin gains can quickly turn into substantial losses within a matter of hours. During times of economic uncertainty, currency trading can be deceptively difficult to master and this partially explains why daily volumes have contracted by around 9% during the last two years. So long as you are aware of this risk and have an innate understanding of the market, however, the foreign exchange is capable of delivering a huge and consistent return.
3 Tips to Help You Get Started as a Forex Trader
With the need for knowledge and understanding prevalent, we have created a brief guide to help you set out as a forex trader. Here are the key points: –
1. Understand the Importance of Determinism
As a novice trader who has absorbed huge amounts of theoretical information concerning the forex market, you may feel as though you are well-placed to succeed. Thinking about the foreign exchange in such linear lines can prove detrimental, however, as while the market remains vulnerable to macroeconomic triggers there are also a number of underlying (and unflinching) laws that govern change within the sector.
This means that traders must showcase a sense of determinism, so that they can identify which macroeconomic factors are likely to impact on prices and discard those that are meaningless. Having a clearly defined strategy that reflects your outlook and prevailing appetite for risk will help with this process, as this will inform your thought-process and ensure that you make considered decision.
On a final note, it is also important to understand that you can profit in a depreciating market with the right strategy, so there is no always a need to react directly to every data release or macroeconomic events.
2. Hone Your Practical Skills in a Risk-free Setting
From this starting point, the next step is to hone your skills and build practical experience of the marketplace. Ideally, you will be able to achieve this without placing your hard-earned money at risk, which is why the vast majority of online trading platforms include demo accounts. These simulate a real-time trading environment, in which you can apply and adapt your strategy without investing genuine cash.
You would typically use this resource for between three and six months, as you look to develop a practical understanding of the market and establish a viable trading strategy that can deliver a profit when you begin to trade for real.
3. Choose a Trading Platform That Offers Automation and Data Resources
Naturally, the desire to develop your skills will impact on your choice of online platform, although as we say many feature demo accounts in the modern age. We would therefore also recommend selecting platforms that also boast high levels of automation and in-depth data resources, as this enables beginners to complete seamless transactions in real-time while also retaining a wealth of historical and live data at their fingertips.
Whether you wish to follow live news feeds, analyse the marketplace or compare historical price charts, it is crucial that you partner with an online platform that is data-driven and easy to navigate. This can not only ensure that you make informed and rewarding decisions, but it also expedites the speed of transactions and enables you to capitalise on short-selling and fleeting trends.
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