Trading for beginners is always a difficult task and there are no short ways that will lead to a high level of proficiency. Such a situation is due to the high level of competition and the ability to make big profits. If you are a novice trader, then you most likely have to learn a lot and master your skills in a large number of trading techniques. For example, you should be aware of when to enter and how to end the session, as well as how to correctly analyze the trends.
Nevertheless, there are also right and wrong approaches to the study of market fundamentals. Choosing the right path will only speed up the process of creating a stable earnings mechanism in the Forex market. So, where you should start?
1) Set the Time Frames
When you start your activity in the market, you should not waste time approaching the short-term strategies. Intraday trading and scalping is the most difficult type, as it requires narrow spreads, a large number of skills, as well as high leverage. On the contrary, long-term trading requires large investments. Instead of these, try yourself in medium-term strategies. Pay attention to options that last from one day to several weeks, which will give you a chance to find very profitable opportunities.
2) Define Your Strong Personal Qualities
Ask yourself about the strengths and weaknesses of your character. Which strategy is right for you and how do you feel in conditions of different risk thresholds? All these questions will help you decide what kind of strategies and currency pairs you need to focus on.
Perhaps the most common reason for the failure of traders is the lack of trading discipline. Fear and greed generated by currency fluctuations can nullify all the positive aspects of a good trading plan. Thorough planning and then strictly following your plan are the key steps towards becoming a successful Forex trader.
3) Select a Currency Pair
At first, it’s better to concentrate on one currency pair. Learn its patterns and characteristics, find out what time of day it is the most volatile, and how it reacts to other cross-pairs and news releases. You should have a desire to thoroughly study your pair of currencies, build a level of intuition that will help you in making the right decisions. For these purposes, it is worth choosing one of the highly liquid currency pairs, such as EUR-USD, GBP-USD, or USD-JPY.
4) Test Your Strategy
Once you have chosen currencies, a timeframe and have seriously studied the mechanisms of Forex operation, then you should start testing some strategies. Select a trading platform and start observing the market. Open charts for your chosen pair in several different timeframes. As a rule, experts recommend the minute, hour, and daily charts. Then, place on each chart the technical indicators you need.
Wait for the moment when your indicators in each timeframe will point in one direction and start demo trading. Use stops, as well as follow the news releases to be ready for market changes.
Forex for beginners is an interesting process, which should not only bring positive experience but also your first profit and stable capital. If you will build your career based on the above recommendations, then you have a good chance of success.