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7 Tips For Beginner Forex Traders

FX Scouts By Jeffrey Cammack Updated: September 11th, 2019

This article will cover seven tips for new traders to help them become more organised and better traders. In order to become a successful trader, you will need to learn how to:

  • Prepare your trading plan
  • Protect your capital
  • Use technology to help you
  • Use a stop loss
  • Avoid complicating your trading style
  • Choose a good broker
  • Be disciplined and patient

Let’s look at these seven areas in a bit more detail. Forex Trading Tips

Tip #1: You Must Have a Trading plan

You need to have a solid trading plan and a good trading routine if you want to succeed.  If you have been trading for a while but still aren’t making the profits you expect, it’s because you’re not following an effective trading plan. Trading on intuition, without the foundation of a solid trading plan, is a recipe for disaster. You have to look at Forex trading like running a business.  Every successful trader has an effective trading plan with a solid structure that can guide them through the day-to-day fluctuations in the market. Having a trading plan will help you manage the emotional instinct many beginners have, which reaps havoc in times when you should be calm.

Tip #2: Protect Your Capital

Never risk more than you can afford to lose. You have to play defensively with the market and not risk more than 2% of your trading capital. Warren Buffett summed up this trading tip well:  “Rule No.1 never lose money. Rule No.2 never forget rule number one.”

Tip #3: Use Technology to Your Advantage

In a fast-moving environment like the Forex market, a trader needs to use the right tools to make them more effective. If you are a technical trader, you should use technical tools for pattern recognition to help you faster identify your favourite price patterns, while if you are a fundamental trader you should be keeping a close eye on market news feeds and event calendars to plan your day.

Tip #4: Use a Stop Loss

You should develop a good habit of using stop-loss orders so you can protect your capital. This way you’ll be better prepared and can handle the losing trades much easier because you know the amount you could potentially lose on each position before entering the trade. A stop loss will help most when the market moves fast and you become indecisive.  In moments like these, a stop loss order will work to your benefit by keeping your losses small.

Tip #5: Keep it Simple

Having a simple strategy will help ensure you get better results from your trading. Relying on too many indicators can be detrimental to your effectiveness lead to indecision. Simplicity does not mean just limiting yourself to specific indicator types but extends to the number of pairs that you trade and the markets that you monitor. Start small, and once you master the small enclave you choose to trade in, then start looking for other smart opportunities to expand into.  This staggered approach will make your trading career an easier process.

Tip #6: Choose Your Broker Carefully

When choosing your Forex broker you have to see your broker as your partner. Make sure you choose one that is reliable, offers the best trading conditions, and one that suits your trading needs. Minimum requirement:  The broker you’re doing business with needs to be regulated and have the proper licenses from major regulatory bodies. This is one way to be safe in your trading and to make sure your funds won’t be stolen or lost in a bankruptcy.

Tip #7: Be Patient

Many people choose to start trading Forex because they think it’s an easy way to make lots of money. Forex trading is not a get rich quick scheme.  Forex trading is more often the opposite of a get rich quick scheme, and in order to do well you need patience and discipline.  Success in this business is achieved after a long period of time, so don’t look for the easy path because achieving success never happens immediately.

Conclusion

Having the discipline to follow these tips on a day-to-day basis will make the difference between profit and loss. Read through the rest of the education section for more detail.

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Trading Forex and CFDs is not suitable for all investors and comes with a high risk of losing money rapidly due to leverage. 75-90% of retail investors lose money trading these products. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.