The international currency market, known as the forex market, is the largest financial market in the world. There is a lot of potential in the forex market to reap profits for the traders of all levels .
Due to the fact that the access to the forex market is very easy, with 24/7 sessions, relatively low costs and significantly high leverage, a huge number of forex traders quickly jump into the market, but then quickly exit after experiencing losses and setbacks.
Here are five tips to help new traders avoid losing money and stay in the competitive forex market.
- Do your Homework
Just because it is easy to enter the forex market doesn’t mean that homework should be avoided. If you want to become a successful forex trader, keep in mind that learning is an integral part of forex trading.
Although it is true that a trader gets the most of the trading knowledge from live trading and experience, a trader should learn the fundamentals of the forex market including economic factors and the geopolitical conditions.
A trader should do homework in order to prepare himself to adapt to the changing regulations, market conditions and world events.
A trading strategy and the formulation of short-term and long-term objectives should also be set before starting your trading journey.
- Choose a Reputable Broker
Your choice of the forex broker is crucial for your success in the forex market.
The forex market is highly unregulated. So, it is possible for a novice trader to end up choosing a less-than reputable broker.
In order to secure deposits, forex traders should only open an account with a broker that is endorsed by the regulatory authorities. Every country has its own regulatory body that gives licenses to the forex brokers.
So, find a forex broker by conducting research in depth and then choose wisely. Click here to find the best forex broker in South Africa.
- Make Use of a Practice Account
Trader, who is just beginning out should start trading from a practice account. Almost all forex trading platforms come with a practice account, also known as demo account or simulated account.
A practice account allows the trader to place virtual trades without a funded account. The biggest advantage of a demo account is that it helps a trader to become adept at order-entry techniques.
- Go Live with Starting Small
Once you have done your homework, practiced with a demo account, and have a strategic trading plan in mind, now is the time to go live. Going live means starting trade with real money.
The fact is that real trading is a whole different experience than practice trading. As such, you should start small when going live in order to avoid losses.
Factors that affect forex trading such as emotions and slippage, cannot be completely understood and accounted for until trading live.
By trading small, you can evaluate your emotions, trading plan and then modify your trading strategy accordingly.