There are many different perspective on forex trading, some may only concentrate on fundamental analysis but some may focus on technical charts. There will be some traders who will take advantage of the leverage while others will keep away from it as the risks will be greater. You do not have to follow them, but these are general forex trading tips to keep you on good shape.
1) Basic Knowledge – This applies to whatever you do or whatever you approach in your life. How can you expect to fly when you have not even learnt how to walk? Especially for the forex market which suggests some high risk, you should know yourself, what are the risks involved and how the market works before you even trade. There are tons of forex trading systems out there, so choose your methods wisely. Define your short term and long term goals based on your character and personality.
Every forex trading strategy have its own risks and advantages. You will have to choose carefully based on the type of person you are. For example, if you are the type of person who can’t really control emotions well and very anxious whenever you trade, then you should go for a long term investment where you seldom have to monitor your trades.
2) Forex Broker That Suits You – This may be the biggest decision that you will have to make when you decide to step into the forex world. Do not rush into this because you will have to depend on your broker for the rest of your trading. Find a forex broker that really suits your style. So to do that, you will have to read up and find reviews on various brokers to find out their advantages and disadvantages. After that, extensive comparison have to be done before you choose one.
After you have narrowed down your selection to some brokers, you should be comparing their trading platforms. The trading platforms are very important because whether you are successful or not depends on that. You will find that some platforms are not user friendly and you will take a lot of time to figure it out. Try to find one which you feel very comfortable in using. Also make sure that the broker’s support and customer service will be there whenever you need it.
3) Selection of Forex Strategy and Application – There are only two primary thoughts when it comes to analyzing the forex market. One is technical analysis and the other one fundamental analysis. We shall look into technical analysis first. I’m sure you have always heard of ‘The trend is your best friend’. This is so because traders believe that the market will repeat its history and movements. There are many tools to help you to analyze the market such as levels and indicators. But there are cons as well. Most indicators are lagging and you should not just depend on that to trade.
Now the fundamental thoughts of trading. Many believe what gets the market really moving is the news of the specific country. This method is the tougher one as we can’t predict what will be the changes in a country. Not many traders use fundamental analysis as their main strategy nowadays though they still use it as a guide and reference. Whatever it is, choose the methodology that suits you well concentrate on it. Consistency is the part of the game.