Do you feel lost in how to start trading forex? You probably have heard that most forex traders fail easily in the beginning and the most common way to learn forex is by losing. Instead, would it not be great to just read one quick article and get ahead on the right track? Today we are going to give you a quick introduction to Forex trading and present the best strategies in forex for beginners. We will also show you how to avoid doing some of the most normal mistakes as a beginner.
This is the article for new forex traders that have not yet started trading on their own. We gonna cover the very first things to do and look after, how to decide a trading strategy and some important things to be aware of before trading.
Where to Start
The first thing a beginner should do is to demo trade for a bit. Even an experienced trader who is looking to refresh themselves, get out of a losing slump and stop battling their way uphill should get to know the currency pairs.
Which ones are the high volumes ones; which ones move slower, steadier; which ones move in tandem with each other. Try some of the “exotics” such as the Norwegian Kroner – NOK, the Hong Kong dollar – HKD, the Singapore dollar – SDG or the Mexican -MXN. Pick 2 – 3 currency pairs and demo trade them.
Watch the pairs you have picked out for a couple of weeks. Get to know the way they move, how fast, in other words, their particular quirks. Map out the fundamental announcements for the week ahead and put them in your calendar to alert you from 15 min to 30 min before the announcement. Watch how your pairs respond to the fundamentals. Note down which fundamentals provoked the strongest reaction – the strongest movement/candles.
Pick a Strategy
There are literally a ton of strategies to choose from but choosing the strategy that works best for you will be trial and error. This is where your Demo account can help you refine a strategy until you are comfortable with it.
1) Decide if you want to be in and out of your trades within the day or 2 days at the most.
2) Are you a scalper, which requires you to be at your computer, constantly scanning for a potential scalping opportunity, finger hovering over the mouse ready to pounce with a click, opening a trade and then closing it.
3) Are you a swing trader where you will plot out your trade based on fibonacci sequences and trend lines, lay in your trade and walk away. If your trade takes a week, 2 weeks or a month, you let it play out it’s course.
Decide how much money you are going to supply your account with and then your lot size accordingly. For beginners, until you get the feel of the market and whether or not you’re comfortable with your strategy to use the lowest lot size – .01. Learn how the margin works vs your equity and get comfortable with the level of margin you will tolerate. What I suggest in deciding your trades is pick one high volatility currency eg: EUR USD, one slower volatility currency eg: NZD USD and perhaps for a third possibly the USD MXN.
When is the best time to trade?
Once you have your strategy picked out and currency pairs, decide the time frames you are going to trade. The Forex Market trades 24/7 Monday to Friday. Unless you have a giant bottle of Dr. Happy Pills, you cannot stay awake if you are swing trading or if your day trade goes to the next day. Some people work or have responsibilities that prevent them from hovering over their trades from start to finish. This is where your emotional mettle is tested. The Forex Market can be traded part-time or full time or anywhere in between.
- New York opens at 8:00 a.m. to 5:00 p.m. EST
- Tokyo opens at 7:00 p.m. to 4:00 a.m. EST
- Sydney opens at 5:00 p.m. to 2:00 a.m. EST
- London opens at 3:00 a.m. to 12:00 noon EST
- Japan and Europe (open 2:00 a.m.–11:00 a.m.) are in full swing so part-time traders have a choice of major currency pairs.
Things to be aware of in Forex trading
Your Stop Loss should reflect the volatility of the currency you are trading. It is silly to put a stop loss of 50 or 60 pips on a pair that moves with fast volume. Your chances of stopping out and incurring a loss is almost certain. Put your stop-loss with enough range for that particular pair to allow you to go to work or sleep without worrying about your trade.
You could also choose to put a trailing stop which allows a minimum of lost pips before it takes you out of the trade. Some love these trailing stops, others feel that somehow the market or broker knows about them and intentionally reverses long enough to stop your trade and then carry on in the direction you had it in, to begin with.
Research different strategies and try them out on your demo trades. Start with the basic and simple strategies but I would first suggest you start with learning the Fibonacci Scales, the Bollinger Bands and how to draw Trend Lines. Then move on to The Trend Reversal, Trading with Momentum, Buying the Breakout, Position Trading, Rangebound Trading, Carry Trade, and the list is endless. Find one you’re comfortable with.
Don’t be afraid to lose or stop out a bad trade. There is a fine line between holding your position because you’re sure the trade will go the way you analyzed and just holding on to a losing position that will continue to lose to an unmanageable level.
Conclusion
We hope we covered everything a beginner in Forex needs to get started. Our experience is the startup is the toughest time, and you will be more comfortable after some practicing. It’s easy to feel stressed and do mistakes if you lose control. Hopefully, the best strategies in forex for beginners presented in this article will give you some needed skills so you can breath out and relax while trading, for more detail visit https://www.dailyforex.com/forex-articles/2020/05/best-time-to-trade-forex/141757
