This is a Guest Post by Shaon@MarketTemper.com
Top 10 Forex Trading Tips for the Beginners Part 1
There is a brutal truth and an old saying in Wall Street, which is
“Bulls make money, bears make money and pigs get slaughtered”
Institutional traders, Banks and even regulated retail brokers ( both the MM or ECN Forex brokerages) call newbies pigs in the market. Most new traders lose their first few accounts due to a few facts which they could’ve avoided. The open secret in forex trading is, 90% of traders lose money. And the surprising reason is not because they don’t know trading but they don’t understand proper risk management.
Having no money management is the primary enemy of a new trader which they can improve by practicing and being disciplined. Read our top 10 trading tips for the beginners and you can improve your trading skills by following them. We divided it into two parts. Let’s see the first 5 tips.
1. Having A Basic Forex Education:
Trading in the currency market is not so easy but it’s not that complex either. Knowing how to sell or buy a currency pair is not forex education. You must learn from a complete and organized forex course where you will get deep knowledge in Forex trading and other relevant topics step by step.
There is no shortcut in the journey of becoming a successful trader. No ‘Holy Grails’ exists in the forex market. Don’t waste your time searching for them. You don’t need them. The core components of any forex trading course are:
The first step of any forex trading course would teach you about the basic forex stuff (like pips, spreads, swaps, Leverage, lot or volume sizing, trading software, economic news and events, central banks e.tc.), and then teach you about currency pairs, their correlations, chart, candles and much more.
Next, it would teach you a trading strategy, without a trading plan you won’t be successful, no matter how much you know. A good forex trading strategy always focuses on how to filter (analyze) and minimize the risk from a trade. It would tell you where to trigger a position, where to put a stop loss and where the take profit. And if the trade is worth risking at all.
Finally, it would tell you how much to risk and how to improve your trading skills, psychology and control your emotions.
2. Money/Risk Management:
How good a professional trader is will be defined by how good they were in managing their capital (risk management). This the number one fact in forex trading. You stay in the business if you follow it or you blow out your account. Nothing can save your account if you don’t follow a disciplined risk management method in your trading. There is nothing absolute in trading, trading is all about probability and risk is everywhere.
71% of the trades in a losing account are usually closed with a profit. Amateur traders often blow up their account using higher leverage with trades. They over trade without any calculation. Only risk the amount you can afford to lose with a trade or it would destroy your account. You must follow a good money management method if you want to survive in the game, there is no alternative. The sooner as you learn the better it will be for you, I learned this the hard way after wasting a couple of years. Don’t get me wrong, I am just being honest with you here.
3. Learn an evergreen trading strategy based on basics and master it.
You need to learn an easy and simple trading method which is based on the raw price action like a ‘core price action’ strategy. A good trading strategy always focuses on risks and losses. A sound trading plan is a set of rules to filter a trade to minimize the risk and maximize the profit.
All losing traders have a common mindset – that they depend on indicators rather than the price itself. An indicator might work for the parson who made it but not for you as you don’t know the strategy behind it. Learn price action strategies and patterns to become a successful trader.
4. Trading journal:
Having a trading journal seems like a bit of extra work, but you will regret later if you don’t keep one. You lose money if you make a mistake and a journal will show you what your mistakes are at a glance. It will improve your trading success rate dramatically.
5. Try Higher Time Frames:
You must trade on higher time frames (Daily Chart) if you want to be successful, there is no exception. Many traders have the misconception that they would find more trading opportunities on a lower timeframe and can earn more money. But the reality is the exact opposite. Trading more frequently increases your risk, and the price action of a lower time frame is messy and easy to get fooled with. It makes the trade setups more complicated.
But in the higher time frames, you will get clearer price action and it’s easier to identify a trade zone. I trade in a daily chart and check weekly chart if I’m having trouble to find a support or resistance line. Price action in H4 seems okay but it’s more accurate in a daily chart. I highly recommend a daily chart for new traders.