A Beginner?s Guide: How to Trade Forex?

Posted by Linda Hudson on June 27th, 2018

Forex stands for foreign exchange but the actual asset referred to is its currencies. If you are new to forex trading, it may be tough as newcomers often step into this world with unrealistic expectations. What you must know is that forex trading is not a scheme which you make rich quickly.

Here is a quick guide for beginners to forex trading.

The retail trading

The market you trade in depends on the collective combination of all participants, so get to know how the industry is mapped out. The relative weight of the trading party to the market is assessed by how much money a party managed which vary from billion-dollar hedge funds to a few thousand dollars.

Complicated things

Don’t make things complex, like overloading your charts with indicators and your strategy with handles. If you complicate your trading strategy, it becomes tricky to follow and less likely to be effective.

Carry out the required backtesting and research to find out the effectiveness of a strategy in different markets. Keeping it simple can be challenging, but when you incorporate the multitude of supporting tools, you can apply it to charts.

Always remember that when it comes to how to trade forex, it is more about the tools you can use.

Trading software and forum

They can be extremely beneficial, especially when you are a beginner. In forex trading, beginners, as well as professionals, need software, and most of them are available for free. You may even get tempted to purchase expert advisers which are also referred to as FX robots. Some EA can be useful, but it is tough for them to stay profitable when the market changes. You also need to understand the code written in to adapt to your EA.

Joining a trading forum is another way to get support when you require it. You can communicate with your peers and share trading analysis ideas with feedback.

Follow the trends

Whether you are a naïve or pro in trading, do it what you see and not what you think. For example, you may think that US dollar is overvalued for too long and of course, you will want to short. But if the prices are moving up, it doesn’t matter what you or anybody thinks. If the price is moving up you should be trading with trends.

In addition to all the points, aforementioned remember that one kind of money is good for investing. Trade only that much you are willing to lose. It will help you stay stable mentally.