7 Forex Trading Tips That Actually Work
I don’t know about you, but it feels like the internet is overrun with Forex advertisements.
A lot of these ads are promising Forex Trading tips and techniques.
Surprisingly, it seems that many of the Forex Trading tips provided on the internet were not written by actual Forex Traders.
The reason why we say this is because most of the tips out there are not any good.
For this reason, we’ve decided to write this article to provide 7 simple Forex Trading tips that actually work.
All the tips in this article comes from years of actual trading experience. They are things we use in our own trading on a daily basis.
The content of this article is both authentic and honest. It’s was written by real traders who are active participants in the FX market.
We believe these 7 Forex Trading tips will be able to save beginner traders a lot of time and money if they pay attention.
Below is a list of the tips we’ll discuss:
- Are you using the right trading methodology?
- Have the right expectations
- Using leverage the right way
- Profit from using the right trading tools
- Is your education bringing you down
- The truth about signals and trading robots
- Why patience matters more than you think
1. Are you using the right trading methodology?
Our first tip deals with methodology.
This tip alone can make you a better trader instantly if you incorporate it.
There’s more to trading than price charts! Don’t fall into the trap of trading with Technical Analysis alone.
Don’t get us wrong.
We love Technical Analysis, and we use it on a daily basis.
BUT, that’s only one part of the equation.
There’s also something called Fundamental Analysis. We believe Fundamental Analysis should form the basis of your trading.
You see, the Technicals are great for showing us HOW prices are moving. But, it cannot tell us WHY price is moving.
Think of Technical and Fundamental Analysis as a scope and rifle…
Imagine that Technical Analysis is your rifle and the Fundamentals is your scope.
Even if you have the best rifle in the world, you’ll still need a scope to shoot on target at a 1000 yards.
Save yourself a lot of frustration by using both these trading methodologies.
Statistics say most retail traders never reach consistency in their trading.
We believe the cause is due to the vast majority of trading education only focusing on charts.
There’s more to the markets than charts. The market is full of emotional traders.
These emotional traders decide the mood of the market.
The Fundamentals show us what the mood is regarding currencies. This allows traders to trade in line with the highest probabilities.
This is how we do it…
Firstly, we establish the mood of the market using Fundamental Analysis. Then, implement Technical Analysis to evaluate the best places for entries and exits.
Now, a lot of beginner traders shy away from Fundamental Analysis because they think its too complicated.
However, they forget that Forex Trading is never easy! If it was easy, everybody would be doing it successfully.
2. Have the right Expectations
The second one of our Forex Trading Tips is probably one of the least expected.
Lowering your expectations is one of the biggest Forex Trading tips we can give you.
What do we mean with lowering your expectations?
We’re referring to your expectations of the realistic returns you can expect from trading. As well as your expectations of how difficult trading really is.
The first one deals with your expectations about realistic returns. Forex Trading is not a get rich quick scheme.
We hope that you have realized that by now.
Similarly, Forex Trading is not gambling either. If you want to gamble, rather go to a casino!
Don’t have an expectation of quick and endless riches like some people claim and promise. It’s not true!
If you believe it’s possible to turn $500 into a million in a month then you probably still believe in Santa as well…
Don’t believe the scammers who lie to you about your potential returns.
The second point deals with your expectations of how difficult Forex Trading really is.
There are lots of people trying to sell Forex Trading as something that is very easy to accomplish.
This is an absolute lie! Forex trading has never been easy and it will never be easy.
Forex Trading is probably one of the hardest things I have ever tried to do in my life.
Trading is very complicated, with numerous subtleties and variables.
Lower your expectations of how easy it will be. Be prepared to put in a lot of time, effort, commitment and dedication to be successful in trading.
Just like any career, it will take time to become successful with the nuances involved in trading.
3. Using Leverage the right way
The next one of our Forex Trading Tips deals with Leverage.
Leverage can be a very valuable tool to use as a currency trader. BUT, it can also be very dangerous in the hands of a beginner.
Experienced traders use leverage as a useful tool to grow an account.
However, most beginners don’t understand how to leverage and end up wiping out entire accounts.
There are two dangers that beginner traders need to watch out for when it comes to leverage.
Firstly, leverage can play games with your emotions.
Most beginners are not ready for the emotional roller coaster that trading can cause.
If a trader has not learned to control their emotions they should not trade with leveraged accounts.
Experienced traders use leverage to load up positions and take advantage of big moves.
However, inexperienced traders over-leverage their accounts and end up wiping it out in single trades.
Once a position starts going against the beginner they keep on adding on more positions. As a result, they end up getting a margin call from their brokers and bust their accounts.
Thus, until you can manage your emotions stick to a 1:1 leverage.
Secondly, leverage becomes a problem with greed.
Beginners need to know that more is not always better. Don’t fall into the trap of trading with a 1:500 leveraged account.
Trading with anything more than a 1:2 leverage is not advised.
Beginners make a lot of big and silly mistakes.
Some mistakes are due to a lack of skill, and other mistakes due to uncontrolled emotions.
Thus, don’t place unnecessary risk on your account. Stick to a 1:1 or maximum 1:2 leverage. First earn your stripes.
Remember, Forex trading is not a get rich quick scheme. Don’t over-leverage with a gambling mentality.
4. Profit from using the right Forex Tools
The fourth Forex Trading Tip is learning to make use of Forex Tools.
Due to the lack of information, most beginners aren’t aware of the value of some Forex Tools on the market.
We use a couple of Trading Tools in our own trading every day. Usually, beginners don’t use some of these tools because they are not free.
What most beginner traders don’t realize is that the majority of bank traders use Forex trading tools.
Especially Forex News Tools such as Bloomberg terminal.
Why would banks pay $2000 per terminal per month if they were not useful?
These tools are extremely helpful. They give us insight into what the market is focusing on.
It’s a way to be plugged into the mood of the market.
Despite this, paying $2000 per month price for a Bloomberg terminal is just too expensive for most retail traders.
Luckily, there are other great News Squawk Tools available which is more affordable.
Our preferred Forex News Squawk is called RanSquawk. The benefits of some of these tools far outweigh their cost.
Some of the services include live audio alerts and updates regarding important market-moving news.
Similarly, there’s also daily session updates which provide detailed market insights. It shows you what’s going on in various asset classes during each trading session.
There’s also a few excellent free online news trading services. The one we use on a daily basis is ForexLive.
Whether you go for the free or the paid services, make sure you use these tools. You’ll thank us later!
Then, there’s also the Reuters news website. It’s free and their articles and insights are valuable.
5. Is your Trading education bringing you down?
This is another big one. Many beginners assume they’ll be able to learn how to trade with free information on the internet.
But the Free stuff on the net won’t give you what you need.
There are three reasons why it’s important to invest in good Forex Training.
Firstly, Forex Training will save you a lot of money.
Beginners usually end up losing a lot of money by relying on free Forex education.
The money some lose this way is a lot more than the price of a good Forex course.
Secondly, Forex training will save you a lot of time.
There’s a lot of amazing free Forex Trading info available out there.
However, the time spent finding reliable free sources takes forever. We’ve been there, done that and got the t-shirt.
But, even when you find reliable info, you still don’t know how to put it all together. You’ll be far better off investing in proper Forex training from the start.
Thirdly, Forex Training will save you lots of unnecessary frustration.
Save yourself the frustration and learn from professionals. Beginners don’t know how to apply the free Forex education they find anyway.
The Free sources will not always show you how to implement the knowledge they share.
Investing in proper training from the start is a very important tip to consider.
6. The truth about Forex signals and Trading Robots
The majority of Forex scams involves Forex signals or robots…
There are so many fraudulent advertisements out there.
It’s always a picture of a Lamborghini or private jet or stashes of cash…
Some of these scams make outrageous claims about making people rich. All you need to do is buy their fake and useless trading robot.
Some of the frauds even create fake unverified track records and sell worthless robots to people.
Let’s just think about this for a moment.
Don’t you think the biggest trading banks in the world would know if such robots existed?
If they did, then banks and hedge funds would not longer need to employ traders.
BUT, they still employ thousands of traders because those robots don’t exist. And if they did, they wouldn’t be sold for $99…
Then there are also Forex Trading signals.
Lots of people are scammed by following fake Trading signals.
But not all signal services are bad. There are honest, hardworking and successful traders out there who sell their signals.
If you don’t have the time to trade for yourself you can consider subscribing to a signal service.
However, you need to be very careful about who to trust. You need to know what to look for in a good signal provider.
The image below gives you more info on what to look for in a signal provider…
Don’t trust a trader just because they had one or two or three good months.
Look for track records that show consistent returns over longer periods like six to twelve months.
We find it surprising that so many people fall for false advertisements out there. But, there will always be people looking for quick money.
If you thought Forex was your ticket to quick and easy cash, think again!
7. Why patience matters more than you think
The last of our Forex Trading Tips deals with patience.
Patience is something that can really improve your trading substantially.
If you’re somebody that struggles with patience like me this section will be important.
Patience will be very important in terms of your Forex Education.
Take your time when you learn how to trade. Make sure you’re comfortable with the basics before you jump in.
Pay attention to both the fundamental and technical side of trading. There really is no teacher like experience!
There are some things that other traders can’t teach you.
Even if someone teaches you how to trade you still need to do your own push-ups.
Practice makes perfect! Don’t learn bad habits that will be tough to unlearn later.
Patience is also important in terms of growing your account.
Many traders desire to grow their accounts with a 1000% a day…
We’ve all been there. But, understand that the best investment firms in the world target between 12% and 24% per year.
Let that sink in for a moment.
Professional traders would be ecstatic to have a return of 20% per year. As long as their returns are consistent.
Thus, don’t place your focus on growing your account as fast as you can. Take your time by finding consistency in the process.
Then the growth will follow naturally. Take your time by only taking the best quality trades.
Anyone can place a random trade and make a few bucks. BUT, trading is more than guessing and hoping.
Place traders that come from proper and thorough analysis. Take your time and choose the best trades.
If you don’t have conviction in a trade setup, don’t take it. It’s better to stay out of the market and miss a move than jump in and regret it.
We hope that you have found this article helpful.
These Forex trading tips can really help you in your trading. Especially if you take the info to heart and put it into practice.
The Forex market can be a very unforgiving place, especially if you’re a beginner. I wish that I had the tips in this article before I started trading.
We had to learn all of these Forex Trading tips the hard way. So learn from our mistakes and start your trading journey the right way.
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