So you have finally decided to try your hand in trading Forex. Although it seems quite simple, a little help drafted from the professionals’ experience is always welcome. Here is how to start trading Forex on the right foot and keep your trading successful.
1. Always go for regulated brokerage
There are so many offers today when it comes to brokerage services. Although you may have stumbled upon the one that exactly matches what you need, you need to be careful. Always check if the broker is not on the blacklist. Some brokers, at some point, fail to comply with the best business practices. And therefore some are put on these lists by Financial authorities. Your duty is to be cautious if you don’t want to fall into the hands of some scammers.
2. Carefully choose the currency pairs
As you already know, the core feature of the Forex market is its volatility. The prices change and are correlated. Prices are also correlated with the other markets, primarily commodities.
When you start trading on Forex, don’t go straight for the exotic pairs but choose those from more stable countries and economies. At one point, you may switch to exotic pairs, but just once, you learn the ropes of the most prominent currencies.
3. Have a trading plan at hand
You cannot trade out of the blue just randomly opening positions for various amounts and various pairs at a time. You must have a strict trading plan on when, why and how you invest the money. The first rule is not to trade with the money you need for other everyday expenses. Also, you should try to start two currency pairs for the sake of diversification and coverage of losses, just in case.
Always bear in mind how much you want to play with during one trading session, and make sure to set the limits regarding stop loss and taking a profit. Also, it’s advisable to use a Forex compounding calculator to always know where you are with your investment.
4. Implement compounding strategy
All the profits you make use for the other investments. It’s a very good strategy that can bring you decent profits in the long term. This is one of the crucial strategies in finance and is similar to a snowball effect.
5. Know you investments
Before investing any money, you need to thoroughly understand the assets you are investing in. When we talk about the Forex, there is a good reason you will have to deal with the fundamental analysis on other markets such as commodities. This is because some currency prices are linked to the prices of gold, copper, iron ore etc.
Finally, do yourself a favour and don’t start trading without tapping free education resources. Just armoured with the appropriate first-hand knowledge, you will be able to get the edge on the market.
Maybe many of you think that Forex is very complicated. The truth is somewhere in the middle. It all depends on your initial approach and the seriousness and dedication to achieving the primary goal- making money.