Forex trading is one of the biggest industries online. What was once the preserve of professionals and big financial institutions, is now an activity worth over $3 trillion dollars a day and enjoyed by millions of people from all walks of life, all around the world. The advance of the internet and the development of technology, means that anyone with an internet connection to trade stocks, currencies, commodities and now cryptocurrencies. However, it is still the forex markets that are traded the most and appeals to most people, of all trading levels, wanting to profit from the financial markets.
Although it may seem a little daunting to many newbies; those with little financial experience or knowledge, following a few simple tips, can go a long way to helping anyone make money forex trading. Here are the 3 top tips to help you become a profitable forex trader.
1. Choose Your Assets
If you want to succeed in forex trading and are unable to make this a full-time thing, then you must make sure that what time you can commit, you use well. With so many assets to trade, you have to ensure that you focus your time and energy just studying a few assets. To be a successful forex trader, you have to know all the ins and outs of an asset; its nuances and how it reacts to certain situations. To predict an assets’ movement, you need to master that asset, and the only way to achieve that is by focus.
A good asset for beginners to start with is the EUR/USD. There is plenty of information available for the EURO/Dollar pair and it is the most traded currency by far. Despite its popularity, it really isn’t that volatile, which means that the risk is less than in any currency pairings. It is good advice that any new traders only choose a handful of assets at most to trade. Focus on those assets and take the time to learn how and why they move.
2. Follow the News
Keeping on top of the financial news is a must for anyone wanting to do well trading forex. Every day there are economic releases and events which can and do affect an assets price. Whether it is geopolitical tensions in the middle east pushing oil prices up or an interest rate rise strengthening the US dollar, you need to keep abreast of what is happening and what could happen to the asset or assets that you have chosen to trade.
It is recommended that you bookmark a few trustworthy sites and get into the routine of checking them regularly for updates and breaking news. Know which economic releases are being made and when and you stand yourself in good stead of being able to predict an assets movement from the news updates.
3. Keep Your Emotions Out of Trading
One of the most common mistakes that traders make is to fail to keep their emotions in check. When it comes to money it is far too easy to become emotionally attached, after all, who likes losing money? The best traders manage to keep their emotions in check. They don’t chase losses and they don’t get carried away when winning. If you start getting emotionally attached to trades, then your ability to think clearly and objectively is severely hampered.
If you are on a bit of a losing streak, that isn’t the time to throw more money into trades hoping to recoup losses. That is the time to take a step back, evaluate your strategy and if need be, reduce the amount you are investing until you get back into winning ways. Likewise, if you are on a winning streak, it is imperative to stay calm, not get carried away and to stick to the strategy that got you the results.
Overall, it is important to remember that forex trading is not rocket science. Once you have chosen your assets, set aside an amount you can afford to lose and familiarize yourself with the charts, it really is just a matter of keeping on top of news events and keeping your emotions in check. Follow the three top tips listed above and you are on the way to making money from forex trading.