It is finally time to wrap up my Forex currency trading basics for beginners series. If you missed my two earlier posts you can find them here:
In this 3rd and final part I am going to talk about some of the things that can impact on your trading, as well as some great tools and sources of information to help you when you decide to enter the market with real money.
Here are a couple of tips that I use, which will hopefully help you out too.
- Have a trading plan and stick to it.
- Set stop losses unless you have a really big bank and are prepared to take either a big loss, or dollar cost average on your position.
- Keep up to date with the latest news. Forex newsrooms are a great place to start, but even google news can provide insight as to when the central banks are interfering with the currency markets or when a big world event is taking place.
- Trade in the 30 minute to 4 hour windows (see my videos in part 2). Anything shorter than this is very hard to do and you will most likely lose your money.
- Start off small a volume. I personally feel that 0.05 is more than adequate if you are trading for long periods of time.
- A profit is always better than a loss, even a little one.
- You don’t always have to be trading, sometimes it is a good idea to be waiting on the sidelines. I know it sounds boring, but if the indicators aren’t all pointing the same way you are gambling with your money rather than investing it.
Learning from other FX traders
Over the last year or 2 there has been a lot of websites popping up which allow people to follow traders as they make trades in real time. There are normally a couple of options on these sites with the main 2 being:
- Get notified when the users you are following make a trade. This option is giving you a chance to evaluate if you want to enter the market as well. Note: It can be great for learning to see when someone enters and exits a position.
- Automatically copy what the other trader does without your input. This option essentially means that you don’t get involved with actively trading and only make money only when the people you follow make money.
I have actually had a fair bit of success following other traders in the past. Many of these people have been playing the markets for a long time and even make a full time living out of it. When selecting a trader to follow I normally go for the traders with a linear profit graph as this tells me they are consistently generating small profits, rather than trading in big swings.
There are plenty of websites that offer this service, but one of the larger ones is Alpari’s TraderConnect. When you sign into your TraderConnect account you get to see all the stats from the other users participating in the program, this lets you decide which users are most likely to continue turning a profit so you can follow them with a greater degree of certainty.
Understanding Forex Indicators
I briefly covered candle sticks in my previous post, but there is so much more to know in this area. Take a few days to fully immerse yourself in learning about all the different indicators and strategies for knowing when to buy, when to sell and when to do nothing. Knowledge is power in this game and if you go in underdone you will lose money. This website has examples of many of the common indicators that you will learn to love, so be sure to go read all about it.
Practice Practice Practice
Use a demo account as much as you can before putting your real money on the table. When you think you have become a trading god, do it for another few weeks, every day, until you can make the correct call at least 75% of the time. The demo account is a great way to get used to the software and the way the market moves at different points in the day. In part 2 of this series I showed you the MetaTrader4 trading software, but be aware that there is also the MetaTrader5 software which may be better suited to your needs. These all all things you need to check out prior to going live.
Good luck with your trading and let me know if you do decide to jump in, I would love to have someone to talk Forex with.
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