If you learnt about Forex trading online and decided that it was a nice opportunity to earn money, you might get interested on how to start it the most efficiently. It is extremely important to get an idea about the Forex markets and trading methods in order to efficiently manage your risks, make highly profitable trades, and focus on success in your new business.
Obtain the relevant education
In order to start trading efficiently, it is important to obtain Forex education. Here, you can find out a lot of useful information. To start, read about the ways of Forex trading and risk management.
Later on, you will realize that nothing can be compared to the experience if you want to learn Forex trading, because it is the best teacher. When you start doing it, you must open a Forex demo account and try demo trading. Thus, you will get excellent technical basis for the mechanics of Forex trading and get used to work with a certain trading platform.
Here you can practically learn about a fundamental thing you will never read in books or heat when speaking with other traders. This is the value of closing your trade and exiting the market when the reason of your entering a trade is not substantiated.
It is easy for traders to think that the market will return for their benefit. However, in fact this is a trap a lot of traders get into. You will be surprised to find out about the number the traders who are disappointed when the market presses further against their original trade.
In his famous statement John Maynard Keynes says that the market can stay irrational, longer than a trader can stay solvent. In other words, there is no sense to say that the market is irrational and that it will come around (i.e., in the direction of your trade), because the capital markets are above all defined by extreme moves.
Use the Micro Forex Account
There is a disadvantage if you learn Forex trading only with a demo-account. In this case you cannot realize what it is to have the money you have earned. Trading instructors often recommend opening a trading account on micro Forex or an account with a broker with a variable size of the trade you can use for small trades.
Small trading will allow you to deal with little money and expose yourself to small losses if you make mistakes or make losing trades. This will teach you much more than everything you can read on the website, in a book or a forum on Forex trading. At the same time, you will get a new idea about everything you will learn by using a demo account for trading.
Learn More About the Currencies You Trade
First of all, you need to understand what you trade. As a rule, new traders start trading everything that looks like as if moving. Usually, they use high leverage and trade in a random manner in both directions. Most often it causes losses.
It is important to understand the currencies you buy and trade. For instance, a currency can bounce upward after a large fall and motivate traders with little experience to try catching the bottom. However, the currency might have been falling because of bad employment reports for several months. Would you risk to buy something like that? Probably, no, and this is an example why you should understand and know what you buy and sell.
Currency trading is a great thing because it is possible to use leverage. Besides, there are many currency pairs for trading. At the same time, it does not mean that you must trade all of them. It is better to choose some of them and focus on them. Just some of them will let you monitor the economic news of the participating countries and you can get an idea about the rhythm of the used currencies.
After trading with a little real account for some time, and understanding your actions, you can use more money and increase your trading capital. Understanding of what you are doing means understanding the market and trading strategies, obtaining control over emotions, and getting rid of bad habits. If you can do this, you can succeed in Forex trading.
Manage Risks
Risk management and emotions management always come together. When people feel greedy, frightened, or emotional, they make mistakes related to risk. This causes losses. When you look at the trading agenda, and treat it logically and objectively, consider the possible potential, this should not cause any excitement. If trading causes emotions, you cannot be objective.
