Forex Trading 'Must Do': Instant Guide For Forex Beginners

It is believed that more than 50% of Forex traders are losing money long term in the foreign currency exchange market. Yet, there are still a lot of Forex traders who jump into the market, trade blindly and lose their money. Trade after trade, it's surprising to see that 'normally-losing' traders keep betting (not investing!) their money into the Forex market without reviewing their trading strategy. No matter if you are the experienced or the beginners, there are certain 'must-dos' when trading Forex to manage the risk wisely and to increase your possibility of making profits.

Forex traders must-do 1: Invest in your brain first

If you are serious about investing in Forex market, building up your trading skills and knowledge is the very first step that you must take. Seminars, workshops, video tutorials, online learning, or even books can help us learn from the professionals. Learn to implement technical charting into your trades; learn using indicators to determine the right time to enter/exit the market; brush up on your experience by trading with a demo account… all these are effective to ensure a smooth start to your forex trading and will also definitely reduce your chances of losing money.

Forex traders must-do 2: Getting the right trading system

It is wise to research very well and consider all the various brokers' systems available to you before making your choice. By applying a certain level of computer automation (like charting and doing auto trades) a well-designed trading system will reduce your work dramatically. This in turns give you more time to focus on studying the market and plotting your strategy. Also, using an auto-trading system can help you to avoid doing emotional-trades.

Forex traders must-do 3: Have a trading plan

As the old saying says: “Failing to plan is a plan to fail”. Trading is like sailing a boat in the middle of the sea; you will not be going anywhere without a compass and a navigator. What is the detail objective of the trades? How much profit to expect from the trade? When to get into the market? How much to invest? What price to exit the market? If things do not work out, when to execute the stop loss order? How high is the affordable risk? A good trading plan should at least answers the above questions. Furthermore, if your trading plan fails, review and modify your trading plan. Find out your mistakes and learn from them.

Forex traders must-do 4: Money management

Money management is controlling your risk through the use of protective stops while balancing your potential for profit against your potential for loss. For example, good money management means you know your profit objective and the odds of being right or wrong. You are better off with a trade where you might lose $1000 if you are wrong and make $500 if you are right that works eight times out of ten, than to make a trade where you would make $1000 if you are right and lose only $500 if you are wrong, but works only one time out of three. If you are investing using your savings, it's even more important that you manage your money. Chances are high that you may miss a good investing chance due to a lack of capital.

Forex traders must-do 5: Disciplined trading

Trading Forex with discipline is important. Success in Forex trading is not achieved solely by plotting out the best trading plan. It is also depends on implementing the trading plan. Be disciplined, trade according to your plan and never trade with your emotion whether you are losing money or winning money. Greed will stop you from taking profits at predetermined levels; while fear will stop you from making the nice kill when it presents itself.

Without a doubt, Forex is gaining in popularity fast against other kinds of trading. No limited market access, no liquidity issues, after market hours, zero commission fees, low capital requirements with high leverage rates, and no restrictions on short selling. Forex can be very beneficial. Always remember to plan your investment wisely by investing first on yourself. You shall get your reward at the end of the road.