When you first get into forex trading, it’s easy to feel confused, lost and completely overwhelmed, especially when you’re hit with a barrage of information about trading. While it may be tempting to go all-out and put your newly-learned skills to the test, you’re better off taking it slow and learning how to trade properly from a professional with experience.
Here are six other tips for beginners to help you avoid making the rookie mistakes so many traders have made in the past.
1. Don’t Let Emotions Get the Best of You
When a trade moves against you, it’s easy to freak out and pull the plug on the trade. But doing so will not only cause you to lose money, it may also cause you to lose a lot of profit along the way.
It’s not uncommon for trades to move against you, and then wind up being big winners in the end.
Set your stop loss signal in a safe place, make sure your positive size is at a level you’re okay with losing, and then let the trade play out. Forget micro-managing each trade. Doing nothing is the best move in most cases.
2. Be Realistic
It’s great to be a dreamer, but save the dreaming for when you have more experience – and more importantly, success. Don’t expect to quit your day job after a few weeks of trading and with just a few thousand dollars in your trading account.
If someone tries to sell you on this dream, run for the hills.
3. Don’t Just Blindly Dive In
Don’t just dive into forex without any education. Learning is what will help you succeed. There’s no reason to reinvent the wheel by using trial and error. Use the valuable education available to you.
Remember, there are many ways to trade forex, including contracts for difference. But if you’re not explicitly learning to trade CFDs, you’re going to wind up losing a lot of money in the long run by making mistakes.
4. Don’t Go Overboard
It’s easy to get eager and go overboard with trading, but it’s better to go slow and steady when you’re just getting started.
Trading too often will make you more vulnerable to your emotions getting the best of you and losing money in the long run.
5. Don’t Get Overwhelmed
There’s a lot of information out there on trading forex, and enough strategies to make your head spin.
Avoid the mental chatter and madness by choosing one mentor, and following their roadmap to success.
6. Get the Basics Down
Take the time to learn about how the forex market actually works, rather than just diving in without any background knowledge of what makes the market tick.
Once you have a solid understanding of forex, you can start making trades slowly and steadily.