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Forex beginner

It takes time to become a successful Forex trader. Many experienced Forex traders follow certain rules to become successful. Before you start trading with real money we advise you to try a free demo account while keeping these steps in mind:

1. Determine why you would like to learn more about trading Forex — This is an important step, and it is helpful to start at the beginning. It would be too simple to say that people trade in Forex to make a profit. Some other reasons might be: “ I want to travel and earn some good money during it” or “ I want a career change” If you have good reasons for starting to trade in Forex, it is likely you will succeed.

Forex goals are not for the short term you have to remember that ‘Rome wasn’t built in a day”. Strategies need to be developed. It is a good idea to use a free demo account to practice, then start to do small trades and finally start doing the bigger trades.

2. Make sure that your expectations are achievable

Do not be fooled by the overstated profit claims that are regularly advertised within the Forex trading industry. Many novice traders do not use trading strategies because they expect that the profit will come rolling in automatically.

In Forex trading it is vital to take small steps. It is important that you realize that and that you set realistic expectations for yourself. Some strategies will prove to be very useful. If you can create a strategy that will earn you enough money to pay your telephone bills, your mortgage and your groceries then it’s quite possible that – if you keep improving your strategy – you can quit your current day job if that is the goal you’ve set for yourself.

Make sure that you do not give up your current job until you have enough Forex knowledge and feel confident about yourself. You don’t want to risk everything.

3. Make sure you have enough capital – You do not actually need a lot of money to open an account and start trading with Forex. To open a micro account $25 is required, and $400 would enable you to open a mini account.

Until you have learned the ins & outs of Forex trading it is wise to open a smaller account. If you want like to make a good living out of being a day trader then the smallest account will not be enough. While deciding which level of funding is required, it may be helpful to consider these things:

Goals for profit: If your goal is to generate $100,000 in profits, then using a method that creates a 100% return annually will require a $100,0000 starting capital.

Maximum drawdown: When you are devising your trading system, maximum drawdown must be taken into consideration. Maximum drawdown is the difference between a relative peaks in equity capital minus a relative through.

For instance if your largest historical drawdown is $50,000 it means that you should have at least $50,000 in your Forex trading account. This means that with $50,000 you will not allow yourself a lot of leeway, and if you do encounter a $50,000 drawdown then you will really have to cease trading.

4. A Forex Business Plan is a necessity – A business plan is necessary to be successful in any line of business and this should be taken into consideration before you participate in the Forex market. Keeping your focus and reducing ambiguity are beneficial when planning. When it comes to successful Forex trading. using a trading plan is important, but consistency is the main factor and key to success.

5. Strategic Development in Currency Trading

Many traders would say this ‘goes without saying’, but some traders take part in impulsive trading. Some traders may have a gift when it comes to determining and analysing market behaviour. However, for the majority of ordinary people a consistent, proven trading system is the key to success.

When you are new to Forex trading it is wise to use a micro or even a demo account; this allows you to evaluate various trading strategies and methods. The temptation to go and start trading with large amounts of real funds will always be there. We insist that you do your utmost best to not give in to it. Forex Demo accounts are there for learning purposes, and it can help you get accustomed to Forex before you start to use real money.

Use these demo accounts to test your skills on the Forex market. If you don’t do well on your demo account, you will more than likely not succeed in trading real money using these same strategies.

If you’ve come up with a new own made Forex trading strategy it is advisable to test and tweak this strategy on a demo account before using it with real money. And we stimulate you to try and come up with new successful trading strategies, after all “Practice makes perfect”.

6. ‘Learn To Trade Forex’ thoroughly — Forex robots can be bought and these robots will do the trading on your behalf by means of special developed algorithms. However this is not advisable and it will not help you to build up knowledge of the Forex market. The Robots may be helpful in the future to allow you to automate the execution of your (tried and tested) strategies. But it is highly advisible to learn and trade Forex yourself; you will gain much more experience and you are more likely to trade on a consistent and successful basis. Try reading information about the Forex market online, perhaps sign up for some online Forex courses, and last but not least; use a demo account to practice with new ideas and strategies.

7. When Trading only use Risk Capital – This basically means that when trading, use money that you actually can afford to lose. This way if you lose the money it will not affect your life in a personal way.

If you use money that you cannot afford to lose, you are using “scared money”. This will create a lot of stress for the trader when the money is in danger of being lost.

Playing with scared money is a recipe for disaster. Even if you have the best trading strategies, you are not guaranteed to receive the right amount of profit at the right time.

8. Be able to let go of a Losing Trade – Many people fall into this “trap”. It is a fact that nobody wants to lose money. However, losing is all part of Forex trading and even the most experienced traders will lose from time to time.

Many new traders justify throwing money away based on the fact that it creates a better average price for their position. They will try to create a logical explanation saying that that once things change they will manage to get to a break even point faster. However, this does not usually happen and their losses in the market will only increase. In the end, this can lead to disaster and large losses.

There is a very simple lesson to be learnt. If you intend to trade Forex to make a good living, never add money to a trade that is losing.

9. Risk Control – Risk control = reward control. If the risk levels you are dealing with are not visible, don’t make a trade. At least not until you have realized an exit value that has market contingencies.

You need to control your risk in order to keep you capital; this will in turn extend your trading by preventing unnecessary losses. For example:

A forex account with $10,000 has a risk factor of $5,000 per completed trade. How many losing trades are you allowed? Yes, this only allows only two opportunities to profit. This is not advisable, and it is wise to look at alternatives that will provide opportunities that are more profitable.

10. Disciplined Trading

There is an abundance of information available on the trading and psychology of Forex. For guaranteed success, disciplined trading is essential and many experience traders will tell you the same thing. Forex trading tools will only prove useful when you are disciplined in the mind and in your trading ways.

Being able to stick to your trading methods and stay focused are beneficial factors of discipline. If you would like to profit and earn a lot of money using the Forex system then using competent trading system will assist you in the long term. When you are able to overcome tempting impulsive emotions and you are able to stay rational, you will be able to trade effectively.

For anyone that would like to trade Forex daily and earn a living these rules are essential to your trading plan. Make sure everything is aligned before making your first trade. This will increase your success rate.

Now it is time to begin. It does not cost anything to get a Forex trading account. and you can start trading with a demo version. This is the best and only way to learn all the tricks of trading Forex. Go ahead and practice. Trade on the Forex market with artificial money, this will allow you to experience how it all works.