Tips You Need to Know for Winning Forex Trades
Simply put, forex trades is a short way of referring to trading foreign currency on the foreign exchange market. For example, if you’re purchasing something from Europe, you’ll need to pay with Euros (or the equivalent in American dollars), and will likely have to go through the foreign exchange.
Likewise, if you’re traveling to Europe, you’ll have to exchange your money before you begin your journey. Otherwise, you’ll discover that most British bookstores won’t take your American dollars.
One thing that isn’t as well known is that foreign exchange rates change regularly – even as quickly as every second. In fact, the forex market can be played similarly to the stock market. Read on to find out some great tips on how to come out on top when engaging in forex trades.
Know the Market
Educate, educate, educate. Know the market’s ins and outs and ups and downs. If you’re going to be risking your own livelihood to compete in the foreign exchange, it will pay (literally) to take some extra time to understand what affects currency pairs before jumping right into it.
And, even if you’re not exactly new to this, there is always something that can be learned that may help you somewhere down the road. When it comes to your money, it’s better to be too cautious than not cautious enough!
Establish Clear Goals
Of course, any financial planner or investor will start by asking you one question: “What are your goals?” What you seek to get out of forex trading will help you to determine the steps you need to take to get there. You need to figure out your profit goals, risk tolerance, and desired trading method. If you’re already deep into it, consider taking a step back and looking at whether your trading methods are helping you to reach your goals, or setting you back.
Are you a high-risk, high-reward kind of person, or do you typically prefer to keep things low-risk, low-reward, and build up your winning gradually over time? These are the kinds of questions you need to ask yourself – and figure out the answers to – before barrelling in head-first.
Watch Pivot Levels
Although this isn’t a hard-and-fast rule, if you want to compete in the forex market, this is something you’ll most likely have to do for one simple reason: everyone else does it, and if you don’t, they’ll have an edge over you. Although this shouldn’t be the primary focus of your trading or even its own trading method, no matter what kind of trading style you hold to, you’ll want to at least keep an eye on them.
Hire a Trustworthy Broker
If you’re not going into it all on your own, and want to start with a little bit of help, one good idea is to hire a broker. They can help to advise you or even run the show for you to take some of the time, stress, and strain off your own shoulders, and work as intermediaries between you and the forex market.
However, it’s extremely important to take serious concern when selecting your broker. Don’t go with just anyone; make sure that they have good reviews, complement your trading style, and, above all, hold a license. This may take extra time, but it will be well worth it in the end.
Want to learn what it’s really like to trade in the forex market without actually risking your hard-earned capital? One option is to use a free practice website where you can simulate forex trades without actually putting up any money.
This can help to inform you whether entering the market is really for you, which methodology works best for you, whether your plan and goals are accomplishable, and also to gain valuable skills through trial and error without taking any losses. You can find this by creating a forex.com practice account.
Determine Buy and Sell Points
Sometimes all the conflicting information may be confusing, but it’s important to go off of data when it comes to buying and selling instead of gut-feelings or emotions. Although some traders disagree and prefer to rely on their intuition, this is something that is more likely to be successful for veteran traders.
If you’re new to the game, don’t be afraid to look at charts and ask for advice. If you use both daily and weekly charts, it’s important to synchronize the two and not buy or sell until both charts confirm that you should.
Start Slowly – Don’t Rush Into It
Like any new skill, learning to trade on the forex market takes time and practice. Rushing into it headlong without doing the proper research is going to cost you – and I mean that literally. It’s helpful to start small, with amounts that won’t leave you in debt if you fail your first few times. As you begin to trade more and build your confidence, you can begin trading larger and larger amounts of money.
Above all else, the number one tip that you can take away from this article is this: in every single step, take your time, do your research, establish clear goals, and don’t do something if you’re not confident in it! This will save you so much stress, as well as money, further on down the road. The longer you stay in the game, the better at it you will become, and it’s your choice if you want to look back on your first few months with pride or with regret at the money you didn’t have to lose.