Learning to trade forex can be a daunting prospect for new investors and there is often an inclination to buy into expensive training courses to prepare for the world of finance. While some sort of education will stand you in good stead for your forex journey, there is no substitute for real life, self-taught experiences.
To get started, you need to select a forex broker that offers an MT5 Trading Platform with a range of features that will make trading easier for you. This is crucial if you are planning to rely on self-teaching as you will need high-quality tools, charts, technical indicators and order types to enter and exit the market at the right time.
Getting to grips with leverage
Another factor to consider at this point is leverage. You will be able to trade “on margin” in forex, which will make your initial deposit go further. Brokers generally offer higher leverage for forex, enabling you to trade large positions and potentially increase your returns. However, it can also magnify losses, so you should wield this carefully when you start out.
Using leverage effectively is something that you can only learn when you start trading with real money. While training accounts can help you to learn these concepts, it is much more difficult to put them into practice in a “live” environment. Learning the right lessons about leverage as you start out will make you a better investor in the long term.
Understanding the psychological pressure
Many lessons that are self-taught are also related to the emotional side of trading forex. Again, in practice, it is easier to swallow losses and not get carried away with a hot streak of gains, but when you start trading properly, working on your “soft” skills will help you buy and sell currencies in the right frame of mind. Correct decision making can be linked to your character and disposition as much as having the best information.
This also extends to the psychological pressure of making trades on a daily basis. This is something that you will only realize when you begin trading. Even the best courses cannot prepare you for what it is really like to make fast, hard decisions that could affect your finances. That’s why it is also important to implement some degree of bankroll management, so your positions don’t consume all of your money. Experienced traders typically follow a 1%-2% rule for investing.
Finding the right information
Promises about quick profits from “trading gurus” and experts can be enticing for new traders but rarely is there ever a get rich strategy that works quickly. Rather than spending money on vendors that over-exaggerate quick return on investments, you should instead focus on finding good information that you can make use of to complete judicious trades.
Partnering with the right broker is vital as you will need access to interactive charts, technical indicators and analysis charts to identify currencies for investment. By practicing and putting these features into use, you can learn more from them and prepare to trade forex with steady, long-term returns in mind.
Learning for free
It is important to remember that it is relatively easy for investors to trade forex. All you need to do is open an account and make a minimum deposit. The low barrier to entry means anyone with a small investment can learn to trade currencies for “free” without having to spend money on an education. Arguably, this is a great place to start as you will have a blank canvas to work from.
It is crucial that you read free articles, tutorials and guides to educate yourself about key forex concepts to build a specific strategy or style of trading that can eventually deliver consistent profits. Without this hands-on, self-taught process, you will struggle to make sense of the fast-paced forex environment.
Finally, traders are focused on making profits, but central to that is knowing when to close a trade and exit the market. This is something that only experience can teach. Even traders who have trained for months or even years can fall into a trap of waiting for the market to turn back in their favor. Financial markets are inherently volatile and irrational, so you need to act decisively when both entering and exiting trades. All of these self-taught lessons are invaluable and will give you a better chance of succeeding when trading forex.