7 Simple Forex Trading Tips That Actually Work
I don’t know about you, but it feels like the internet is overrun these days with all sorts of articles with so called Forex Trading tips and techniques. Surprisingly, it would seem that many of the Forex Trading tips provided on the internet was not written by actual Forex Traders. For this reason, we have decided to write this article to give beginner traders 7 simple Forex Trading tips that actually work.
All of the tips in this article comes from years of actual trading experience. Our 7 simple Forex Trading Tips that actually work are things we use on a daily basis in our own trading. The content of this article is both authentic and honest, written by traders who are active participants in the forex 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 to them. Let us not waste any further time and jump right into tip number one.
1. Lower your Expectations
The first of our 7 simple Forex Trading Tips that actually work is probably one of the most important as well. Lowering your expectations is probably one of the biggest Forex Trading tips we can give you. What do we mean with lowering your expectations? Well, we are referring to your expectations of the realistic monetary returns in trading, and also your expectations of how difficult Forex trading really is.
The first one deals with your expectations about realistic monetary returns in trading. Forex Trading is not a get rich quick scheme. You need to know that straight away. Similarly, Forex Trading is not gambling either. If you want to gamble, rather go to a casino where gamblers have better odds.
Do not have an expectation of quick and endless riches like some people claim and promise. If someone really believes it’s possible for a beginner trader to turn $500 into millions within a few months, that person probably still believes in Santa Clause as well. Don’t believe the scammers who lie to you about your potential returns in forex trading.
In like manner, 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 falsehood! 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 entire life. Trading is very complicated, with numerous subtleties and variables that needs to be taken into consideration.
Lower your expectations of how easy it will be, and be prepared to put in a lot of time, effort, commitment and dedication to be successful in trading. Just like any new career, it will take time to become comfortable with the nuances involved in trading.
2. Use BOTH Technical AND Fundamental Analysis
This tip will be able to make you a much better consistent trader if you will take it to heart. Do not fall into the habit of blindly trading with Technical Analysis alone.
Do not get us wrong. We love Technical Analysis, especially pure Price Action. We trade with Price Action on a daily basis. We cannot trade successfully without using our Price Action skills. However, Technical Analysis methods are only one part of the equation.
Fundamental Analysis should form part of your trading arsenal. Think of Technical and Fundamental Analysis as a scope and rifle…Technical Analysis is the rifle and Fundamental Analysis is your scope. Even if you have the very best rifle in the world, you will still need a scope to shoot on target at 500 yards away.
Save yourself a lot of frustration by combining both of these trading methods. Fundamental Analysis will help you to understand why the market is moving. On the other hand, Technical Analysis will help you to understand how the market is moving.
Statistics say that over 95% of all retail traders can never trade consistently successful or profitable. In our opinion, the reason for this is because 95% of all trading information and courses available only focus on Technical Analysis alone.
There is more to the markets than just price charts. The market is full of emotional traders. These emotional traders decides the mood of the market. Fundamental Analysis helps us determine what the mood is regarding currencies.
Thus, first establish what the mood of the market is using Fundamental Analysis. Then, implement Technical Analysis to evaluate the best possible places for entries and exits.
Now, a lot of beginner traders shy away from Fundamental Analysis because they say it is too difficult and complicated. However, they forget that Forex Trading is not easy remember. If it was easy, everybody would be doing it successfully.
3. Use Leverage Sparingly
The next tip on our list is learning to use leverage sparingly. Leverage can be a very valuable tool to use as a currency trader. At the same time, it can also be a very dangerous tool in the hands of a beginner trader.
For the experienced traders, leverage can be a very useful tool to grow an account. However, most beginner traders do not understand how to leverage and end up wiping out entire trading accounts in the process.
There are two dangers that beginner traders need to watch out for when it comes to leverage. The first, has to deal with the emotional side of leverage. As a beginner, you will probably not be ready for the emotional rollercoaster that trading can cause. If a trader has not learned to control their emotions they should not trade with leveraged accounts.
You see, experienced traders use leverage to load up their positions to take full advantage of big moves in the market. However, due to lack of experience, beginner traders over-leverage their accounts and end up wiping it out in a single bad trade.
Once a position starts going against the beginner trader they keep on adding and adding bigger and 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.
The second danger of leverage that beginners need to know is that more is not always better. Just because your broker allows you to trade with a 1:500 leverage does not make it a wise choice. Trading with anything more than a 1:2 leverage is not advised for beginner traders.
As a beginner, you are going to make a lot of big and silly mistakes. Some of these mistakes will be due to a lack of skill, and other mistakes will be due to a lack of emotional control. Thus, do not place unnecessary risk on your account by making those mistakes with high leverage.
Rather, stick to a 1:1 or maximum 1:2 leverage until you have earned your stripes so to speak. Remember, Forex trading is not a get rich quick scheme. Don’t over-leverage in the hopes of making easy cash. There is a name for that actually, and it is called gambling, not trading.
4. Make use of Forex Tools
The fourth of our 7 simple Forex Trading Tips that actually work is learning to make use of Forex Tools. Due to the lack of information, most beginner traders are not always aware of the existence and value of some of the best Forex Tools on the market.
In our own trading, not one day goes by that we do not make use of Forex Trading Tools. The other reason most beginner traders do not use some of these tools is because the really good ones are not free.
What most beginner traders does not realise is that the majority of bank traders use forex trading tools. Especially Forex News Tools such as Bloomberg terminal. Why would banks pay massive amounts of money each month to give their traders access to these types of tools if they were not useful?
These types of tools are extremely helpful because they give us insight into what the market is focussing on. It is a way to be plugged in to the mood of the market. Despite this, the $2000 per month price tag for a Bloomberg terminal is just too expensive for majority of retail traders.
Luckily, there are other great News Squawk Forex Tools available which is much 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 includes live audio alerts and updates regarding important market moving news. Similarly, there is also daily session updates which provides detailed updates about what is going on in various asset classes during each trading session.
There is also a few excellent free online trading news services available. 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 will thank us later.
Then, there is also the normal Bloomberg and Reuters news websites. Their websites are absolutely free and their articles and insights are valuable.
5. Invest in proper Forex Training
This is another big one. Many beginner traders assume they will be able to trade the Forex Markets successfully by relying on free information they read on the internet.
In our opinion, there are three reasons why it is very important for beginner traders to invest in good Forex Training. Firstly, Forex Training will save you a lot of money. Normally, beginner traders end up losing a lot of money by relying on the free forex info they find on the internet. The money some beginner traders will lose this way is a lot more than what they would have paid for a good forex training course.
Secondly, Forex training will save you a lot of time. There are a lot of amazing free Forex Trading info available on the internet. However, it takes tremendous amount of time scouring the internet looking for reliable free sources on Forex Trading. We have been there, done that and got the t-shirt.
Moreover, once you have come across sites that give you reliable forex trading info, you still won’t know how to put it all together. You will be far better off investing in proper forex training from the start and so doing cut your learning curve tremendously.
Thirdly, investing in good Forex Training from the start will save you lots and lots of unnecessary frustration. As a beginner trader, you do not have the required experience to know how to apply all the free forex education you find on the internet.
There are some great and helpful free forex education sources on the Internet. Nevertheless, those sources will not always show you how to implement the correct knowledge in the right ways.
Any hopeful beginner trader will save themselves a lot of time, money and heartache if they would just invest in proper forex training from the start.
6. Watch out for trading robots and signal providers
The majority of scammers and fraudsters in the forex industry make use of trading signals and robots to con people out of their money. There are so many blatantly fraudulent advertisements out there. It’s always a picture of a Lamborghini or private jet or stashes of cash.…
Some of these scammers will make outrageous claims about making you a millionaire in no time if you simply follow their signals or buy their robots. Similarly, clever tricksters create fake unverified track records and sell worthless trading robots to people for ridiculous amounts of money.
Let us reason about this for a moment. Don’t you think if there were trading robots that could continuously trade profitably with no hassle that all the biggest banks in the world would know about it? If such robots did exist, there would be no more need for banks, hedge funds and prop firms to still employ the thousands of institutional traders in their ranks.
Having said that, there are some honest, hardworking and successful traders out there who sell their signals. If you are someone who does not have the time to sit in front of a PC all day, then maybe you can consider subscribing to a reputable signal service.
Not all signal providers are bad, but you need to be very careful about who to trust. You need to know what to look for in a good signal provider. For example, just having a good average return does not mean a trader will trade profitably…
Don’t trust a trader just because they had one or two or three good months. Look for traders who can show consistent returns over longer period of time like six to twelve months. To be honest, in this day and age we find it surprising that so many people fall for the false advertisements out there. Then again, there will always be people looking for ways to make money quick. If you are someone that was hoping that forex was your ticket to quick and easy cash, rather stay away from Forex for your own good.
7. Take your Time
The last of our 7 simple Forex Trading Tips that actually work is make sure you take your time. Patience is something that can really improve your trading substantially. There are three basic areas that you should learn to take your time in trading.
The first, is take your time when it comes to your training. Take your time when you learn how to trade. Make sure you are comfortable with the basics of trading before you jump in. In particular, 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 will not be able to teach you. You see, even if I were to teach you how I trade, you still need to take your time in the markets to be able to see what we see. Practise makes perfect, but make sure that you practise perfectly so that you do not learn bad habits that will be tough to unlearn later.
The second area in which you should learn to take your time in trading, is with growing your account. I know the desire to see your account grow with a 1000% a day is very tempting. We have all been there. However, you need to realise that the best investment firms in the world target between 12% and 24% return per annum.
Let that sink in for a moment. Any professional institutional trader would be happy to have a return of 20% at the end of a year. As long as their returns are consistent. Thus, do not place all your energy and focus on growing your account as fast as you can. Take your time by finding consistency in the process, and then the growth will follow naturally.
The third area where you should take your time is with your trade setups. Anyone can place a few random trades and make a few bucks here and there. However, trading is more than guessing and hoping. Trading ideas should be based on well thought through analysis.
Take your time and ask yourself whether you really have a conviction that next trade will be a winner or not. If you don’t have conviction in a trade setup, do not take it. It is better to stay out of the market and miss out of a move than jump in and regret it later.
We hope that you have found the above information helpful. We trust that our 7 simple forex trading tips that actually work will really help you in your trading, more so if you are a beginner trader. The forex market can be a very unforgiving place, especially if you are new to trading. I wish that I had this information when I started trading.
As always, please remember that Forex trading can be very dangerous if you don’t know what you are doing. For this reason, make sure you start trading on a demo account until you are comfortable before you start trading with real capital. Also, take our advice below and consider getting some Forex education before you start trading.
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