The best Forex trading tips for beginners - Bankless Times

Posted: 01 Apr 2019 11:46 PM PDT

With online trading becoming more accessible, more investors are switching to forex trading as a way to expand their portfolios. Beginners and expert traders alike are looking at the financial markets – the forex market in particular – as being lucrative enough to enter thanks to the wealth of opportunities they offer.

The forex market, however, can be challenging for beginners. While there are plenty of opportunities to make money, there are also risks that need to be mitigated. The volatility of the forex market and the nature of online trading itself are parts of the challenges. If you are new to forex trading, these next few tips and tricks will help you conquer the market.

Stick with Regulated Brokers

Not too long ago, we took a closer look at why experienced traders always use the services of regulated brokers. Regulated brokers offer the best trading experience and allow you to profit from foreign currency pairs without additional risks. They are also more affordable and have a clear pricing structure that you can review before opening an account.

The challenge now is finding a good broker to engage, but this too is an easy one to overcome thanks to sites like InvestinGoal.com. The site is filled with objective reviews of online brokers, including the best forex and CFD brokers on the market. The way InvestinGoal structures its reviews really helps new traders understand the brokers they want to engage. We recently discovered that XM offers a commission-free trading environment, uses the latest MT5 as the trading platform of choice, and lets traders open an account with as little as $5 from reading the review of the broker XM. You can find details like these about your brokers too.

Try Before You Trade

Another great way to avoid absorbing unnecessary risks is giving the trading platform – and the broker – a try before investing your real money into the market. There are demo accounts you can open with every broker on the market. The purpose of these demo accounts is giving you the opportunity to trade in a live market without any risk.

Rather than using the demo account to play around, you can actually use it to gain insights on the trading experience offered by a broker. Set the demo account margin to the amount you plan to deposit into your real account and begin testing your trading strategies and tactics.

Since you are not trading with real money, you cannot bank real profits. That said, you can spend a couple of weeks testing different trading approaches and gaining real experience in the market. This gives you the opportunity to learn from your profits and losses, preparing you for real trades even more.

Leave Emotions Out

Trading emotionally is one of the biggest mistakes you can make as a beginner. Unfortunately, it is also recognised as the most common mistake to make. When you trade emotionally, you are bound to make the wrong decisions and lose a portion of your margin along the way.

I'm not just talking about chasing your losses either. Banking big profits can put you in tilt, which will then lead to you opening more positions without realizing that the market has changed direction. The result is usually that big profit you just banked getting completely wiped out.

Chasing losses is even worse when you don't keep your emotions in check. You keep opening positions hoping for the market to turn, only to find yourself losing more of your trading capital. Losses also lead to you losing the ability to use strategies like hedging to manage risks.

Maintain a Healthy Risk Profile

The more you know about the market, the healthier your risk profile will be. Entering the market blindly and hoping for the best is not how you make money in the forex market. You need to invest in information (i.e. news, financial announcements, etc.) and the right trading indicators to help you make calculated decisions every time.

To further strengthen your risk profile, you need to utilize tools such as Take Profit (TP), Stop Loss (SL), and action price. Rather than relying on your quick reflexes to open a position, for example, you can set a target price for the position, determine the target profit based on your strategy, and limit your loss with an SL in place.

Instead of trading without an SL, learn to use trailing stops to your advantage. You have to keep the trading platform open in order for the trailing stops to be enforced, but that's a small price to pay when you consider how much a trailing stop can limit your risks in a volatile market.

The forex market doesn't have to be confusing. There are a lot of resources to help you learn about forex trading.

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Conversations with a Forex trader: is it possible to trade on Forex for a living? - The South African

Posted: 02 Apr 2019 03:21 AM PDT

The South African spoke to Erin Peterson, the head trader at JustForex.com

Just a decade ago, the market was mostly unregulated and scammers ran amok. Bucket shops, boiler rooms, market makers and brokers that traded against their clientele were very common and even slot machines had better payout security than Forex trading.

However, things changed. After the majestic screwup of CrownForex, both EU and US took a long hard look at the Forex market and introduced a lot of new regulations. This led to new generations of brokers — ones that are willing to play by the rules and profit with their customers, not from them. Making a living on Forex is no longer a dream — for some people, it's a reality.

The South African talked to Erin Peterson — a private trader who witnessed the development of the Forex market first-hand and is currently living off her trading.

What made you get into the Forex trading?

My friend was trading and constantly talked about it. I don't think he was particularly successful, but it got me interested. I had enough money at the time but I wanted more, so I thought "why not?"

I also wanted to understand how it works. So I started reading books and blogs, talked with other traders online… That was six years ago and I am still learning new things.

How did you start?

I spent a few months just learning things in my spare time. Read a lot of books, most of them bad… Ones I can recommend are Alexander Elder's Trading for a Living, and Bill Williams' Trader's Troubleshooting Tools. I certainly wish I read them first.

Once I was comfortable, I started trading with a Demo account. It's a virtual exchange where you trade with virtual money. It's free at most brokers and allows you to test the strategies without risking your real money. Of course, it's still not like real trading — there is no risk and no stress involved. But it was good practice for a few weeks and allowed me to avoid a lot of mistakes later.

Then I started a Cent account with… 20 USD? Maybe 25, I am not sure anymore. I doubled it in two weeks, then lost everything on a risky trade. That lead to long research about risk management and why it is actually important.

The next attempt was two or three months later, this time with a 500 USD deposit and on a standard account. This time I traded small and actually had a stable income.

Forex trading has a bit of a reputation, is it a bit like gambling?

Outsiders may think that Forex is all about luck but they would be wrong. There are laws, rules and algorithms at work. The most crucial ones are supply and demand. And as long as you understand those rules, you can predict the state of the market with a reasonable success rate.

Basically, it's all about probability. Game the system and make money off other people's mistakes while they are making money off yours. And trust me, you will make mistakes — everyone does. But as long as you manage your risks well, you will be able to cover those mistakes and even make a profit.

Once you have some training under their belts, you will trade forex successfully. I'm not saying that everyone can be a Jesse Livermore, George Soros or Jim Rogers — those are extreme cases of having luck, talent and a lot of starting capital. But you can make some money.

Just don't expect much. You need to be a wizard to start with $100 and make $10 000. But you can definitely invest $10 000 and comfortably live off the profits. Of course, you should start smaller than that, but you get the idea.

How does one compete against the automated traders?

Automated traders aren't really a threat on the Forex market. Sure, they are faster than you but they are stuck with primitive strategies, for the most part. And even then, the market is large and liquid enough for them to not even register as a threat. There's enough money there for all of us.

Now, had I been on the stock or a derivative market, I'd be more concerned.

How does the Forex market differ from other markets?

Forex is the largest, has the lowest cost of the transaction (not counting crypto) and the fastest cash flow. Each year it grows ever bigger. Current daily trading volume is north of 6 million USD.

What currencies are the best to trade and why?

You should start with the major currency pairs. Personally I use EUR / USD, USD / JPY, GBP / USD, USD / CAD etc.

How many hours a day do you trade?

I trade for about four hours a day, spread throughout the day. I take a lot of breaks when nothing interesting is happening.

What is the best strategy for trading forex?

Swing trading is OK for beginners, but personally, I recommend intraday trading — it's simpler and has less non-obvious issues.

What emotional characteristics are required to be a successful trader?

Discipline. If you panic after a bad deal, you make mistakes.
Patience. The best forex traders will tell you that it is worth waiting for one profitable transaction rather than opening many positions "just in case."
Control. You need to manage risks, capital, emotions, investments, and the trading process. You need to know how to choose between bad and worse, and not feel bad afterwards.
Enthusiasm. If you don't care about the process of trading, you should quit right now.
Self-control. This is achieved with a clear plan of action, when the trader is in no hurry to take risks, thinks about every step, and can spot trends in the market.

How has the market changed in the years since you started trading?

Six years ago you could coast on a single strategy and still make money regularly. You can't anymore. I recommend having several trading strategies and switching between them.

How much should one have set aside before they can begin trading?

Start with 20 USD in a Cent account. You'll lose it, but you will understand a lot more once you are done. Then try again and again until you don't.

Once you can stay profitable, put 100 USD in a Standard account. That should be enough to start trading without a serious handicap. You can deposit more, up to $500, but that is not strictly necessary.

What profits can one expect to make?

There is no universal metric. It all depends on your deposit and the state of the market. Generally, I can make 10-20% off my deposit each month. But there were times when I made more after catching a good trend.

How does one get started?

A F orex B roker will provide you with access to the market via their software platforms. I've been trading with JustForex for several years. I like their spreads which are pretty decent. The broker also offers high leverage, so I think it's a good place for beginners. They also provide support, so feel free to ask them questions.

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