1. Have a Plan.
Have a plan and stick to it. It is so important to know what you are getting into before you jump straight in, not only this but having a well thought out plan you have confidence in will go a long way in helping you profit, but also minimise losses. This is the first step to successful Forex Trading. Having a plan will not only help you decide what to do, it will help you prevent yourself from making any bad decisions based on emotional judgements.
2. Know your Market.
Pick a currency pair and learn everything there is to know about it. Become an expert in your field. There is no sense spreading yourself too thinly across too many currency pairs – you will not know enough about any of them and this leaves your open to serious risks. One of the great things about the Forex Market is there is a currency to suit everyone. Decide when you want to or when you are able to trade each day and choose a currency that fits in with your schedule. Whether you’re active during prime dollar trading times, or perhaps European or Asian currencies will suit you best, research everything you can and stay up to date with current news.
3. Start Small.
However much research you’ve done and however solid your plan is, it is always a good idea to start small. You can know everything this is to know about Forex Trading, but nothing prepares you for it like learning while doing. Start will a few small investments, so you are fully prepared for when you want to start investing with large amounts.
4. Keep it Simple.
Make sure your plan is easy to understand. You need to know why you are doing what your doing, every step of the way. You need to have full confidence in yourself for every trade and decision you make.
5. Be Wary of Leverage.
While leverage can be a great way to maximise your profits, don’t forget it is a double-edged sword. Should the market move against you, you stand to lose far more than your original deposit. The maximum leverage allowed in the US can increase your profits 50-fold, but can also make you liable to lose the same amount. Make sure you only use what you can afford to lose.
6. Keep Records.
Take note of every success and every failure. Your own records will be invaluable as you continue to trade in the Forex Market, helping you learn from any mistakes and improve your plan to maximise successes in the future. Learn to love the small losses, as they all contribute to the bank of information you are collating.
7. Aim to Minimize Losses Rather than Maximise Gains.
Trade with this in mind to ensure you continue trading for years to come. This mantra will help you safeguard against letting greed and emotions invest for you, and keep you trading responsibly throughout.
8. Know Yourself.
This is perhaps the most important tip to consider before you start Forex Trading. Understanding yourself, knowing your risk tolerance, your patience and your emotions should be the first step before even starting your plan. This will all have an effect on what market you start trading in and the kind of trading strategy you decide to employ. Most importantly, stay positive and have faith in your plan – you have designed it around yourself and your needs.