Top 10 Trading Tips For Beginners
When starting out as a trader, it is easy to get overwhelmed with all the information that is thrown at you; and when it comes to wanting a profitable experience, this stress can mount up. When embarking on your trading journey, it is important to take it slow and make sure you educate yourself to become familiar and comfortable with a few basics first.
Let’s take a look at some trading tips that will ease your mind and make your trading journey an enjoyable, and potentially profitable one.
1: Learn the basics
Educating yourself on the basics of trading from the get-go is key. It is a downfall that many novice or first time traders do not take the time to educate themselves before diving into the markets. Not doing this will not only hinder your chances of success, but also have an emotional impact, which will lead to unnecessary mistakes being made whilst trading.
Beginner level traders must start by familiarising themselves with the basics. First off, learn the terminologies and how the financial markets work as a whole. Once you become comfortable with those, you can move on to learning about the strategies involved with trading, and analysis. A great way to start getting accustomed to trading, is to practice on a demo account; this will allow you to place real trades, try out some strategies and build on your trading confidence, using virtual money, before diving in with real money.
2: Perfect your strategy
With an abundance of strategies and trading methods available, it's easy to get caught up in wanting to try them all out. Your best option is to research and perfect one strategy that you feel works for you and be persistent with it; be consistent to see results. It can be easy to say you will drop one strategy and move on to a more improved and newer strategy, but by doing this you are not perfecting and focussing on the main goal - to see profits. Of course, there is no strategy that produces only wins; some lose and some win, but consistency can result in profits.
3: Don’t put too much pressure on yourself
Reaping in the benefits of trading takes time and patience. Many novice traders start out with the view that they will see consistent profits right away. Though this can be true, to see significant profits, it takes time, hard work and consistency. It’s vital to stay realistic and not become disheartened when things don’t turn out how you thought they would. To reap the benefits of trading, keep practicing and be patient; because practice does make perfect when it comes to trading forex. Relax, enjoy it, and don’t put too much pressure on yourself. Without practice you cannot improve on your trading skills; see the small failures as a path to bigger wins, and don’t beat yourself up about it.
4: Sit some trades out
This is especially important for new traders. The most successful traders will only make significant trades throughout the year; known as a long-term hold strategy, which often gives out higher returns than a consistently active trading strategy.
It’s easy to get excited by the constant price movements and want to frequently place trades, but impulsive trading will certainly lead to poor decision making, and thus a loss. Sit some trades out and make informed decisions before placing a trade, in order to see long-term results.
5: Choose the right broker for you
With so many brokers to choose from, where do you start? Make sure you are choosing a reputable broker, with the support you need. The tools they offer,the trading platform, transaction costs, and customer support are important factors to look at. All traders will need support, so it is vital to team with a broker who cares and is there when needed. Choosing your broker wisely will hugely impact your success when trading the markets. Ensure that the broker is offering a safe and secure trading environment, are licensed and regulated, and offer full transparency.
6: Manage your risks
When beginning to trade, you must always be aware of the risks. If you are not educated on the possible outcomes of trading, you may end up seeing losses that will hinder your trading journey. Never invest more than you can afford to lose; simply put, manage your risks. Through this you can trade more effectively without the chance of losing it all. Know your limits.
7: Find your method
After trading for a while, you will begin to find what works best for you and what trading styles and methods do not benefit you. As a newbie trader, you need to figure out what method works in your favour, one that you feel fully comfortable with, and of course, also enjoy. This will not only make your trading potentially more profitable, but mentally, you will absorb information and enjoy and be excited by what you are doing. It's vital to identify early on what type of trader you are and implement the style that suits YOU, to see success from trading forex.
8: Keep track of what you are doing
A great way to remain on the right trading path is to keep a journal and document your every move. The perfect indicator of future market trends and price movements is to look back on the past. This also goes for your trading history; if you continue to make mistakes, you need to look back and change up what you have been doing. Write down the entry and exit points of your trades and how much you won or lost, alongside the date and time. Keeping track of all these factors will put you in a potentially more profitable position.
9: Continue to educate yourself
Never stop learning! The financial markets are forever evolving. There are always lessons to be learned, and you must continuously work on enhancing your knowledge to keep up-to-date with the latest market trends. This does not only mean studying charts and market news, but also educate yourself through webinars, online courses, articles, videos and books. If you do not continue to learn, you will fall behind. Learn strategies, emotional control, geopolitical influence and much more. Study, practice, repeat!
10: Take control of your emotions
This is an important one! You may understand all of the trading strategies, all of the technical indicators etc, but if you have not mastered controlling your emotions, everything else is redundant. You need to learn to not make impulsive decisions, or irrational trades when you are fearful, angry, greedy or depressed. Another emotion that needs to be mastered is awareness. All successful traders are fully aware of the uncertainties that come with the forex market. They are prepared for loss and therefore do not result in panic, fear or depression when results are not in their favour. Control your emotions, don’t let your emotions control you.
Forex trading can be daunting when starting out, but if you practice these 10 tips, you are one step closer to reaching your goals. Be patient and don’t give up; if you ever feel overwhelmed just take a step back, relax and resume when you are ready. You can refer back to this list to take control of your trading journey, and always remember there will be trials and tribulations; but if you keep practicing and learning, you can have a fruitful trading experience.