Forex is a flourishing industry; Google the phrase and millions of hits will instantly return promising untold riches in return for investing just $10 into the market. Whilst in more or less any other arena, this claim would seem unbelievable, many investors new to the market are drawn in by the claims made.
Forex is a trade that displays an almost unrivalled kindness to beginners; there are tools right across the market designed specifically to help those new to the industry or those looking for a bit more guidance. With financial dealing markets usually rather elitist this approach is one of the reasons why more and more non-professional traders are entering into the forex market.
However, a great deal of new traders will also end up walking away very quickly, having lost all of their money. It is therefore essential that any newcomer to the trade is patient and heeds the advice on offer in order to hopefully end up with some gains.
Firstly, you will lose. And then you will lose some more. Accept this, minimise your losses and keep trading. If you are unable to either afford or accept this fact then forex is not for you.
The way for newcomers to make money in forex is first by finding a trading strategy that works. There are a whole host on offer either in books, free advice sites on the internet or for a fee, learning trade from a professional. Once a clearly defined strategy has been decided upon, practice, practice and practice some more. Many brokers offer free demo accounts allowing new traders to learn the skills with experienced traders using the accounts to try out new methods of dealing.
Once the demo account has been used for some time, it is time to move on to an active account.
However, to make money in the longer term, non-professional traders need to ensure they do no wipe their account out by trading with too large sums. Non-professionals should limit each trade to no more than 1% of the capital in their account. Professional traders tend to stick with a limit of 2%. By restricting the amount, the losses – which are inevitable – will be minimal and the trader will be able to continue. As winning deals start to come in, gains will be made – and whilst these will be small to start with, slow and steady wins the race.
Overcomplicating matters is another common mistake for novices; there are many different currency combinations out there in the market but there is no need to trade in all of them. The best advice is to stick to one pair and just trade that – and preferably well-established currencies with plenty of coverage in forex news. This will allow good, in-depth knowledge and experience to develop whilst again minimising losses. However, whilst information and data is helpful, there are so many ways in which to track forex, it is possible to have an overload which can cloud the issue. Every trader will find their own preferred methods of tracking, but stick to no more than three measures which follow overall trends as well as resistance and support levels.