The Forex market has a lot of advantages and that’s why so many people want to trade it. But before you start trading Forex, there are a few things you need to do first to make sure you cut your risks to the minimum.
1 – Understand that there is risk involved. This is one of the most basic and also overlapped conditions to trade in this market. If you want to succeed, probably even make a living from Forex, you need to understand that you will win and that you will also lose. You should never trade with money you can’t afford to lose. Believe me this will have a major negative impact in the way you trade because this will directly affect your emotions. It will pressure you to make money: if you have a win trade you’ll think you could have done a lot better; if you have a loss, you’ll think that you’re a terrible trader and that you need to recover what you lost as soon as possible, and this will make you lose money even faster. Being aware of this condition but also of your emotions is critical if you want to be successful in this market.
2 – Getting Forex education. Forex is a unique market. Even if you already have experience trading other financial markets such as stocks, options, futures, or others, you’ll find out that this is a particular market, with its own advantages and disadvantages. It’s truly important to learn about Forex, to understand how things work… And I say this even if you’re thinking about buying a Forex robot that does all the work for you. If you don’t know anything about Forex, if the robot starts to lose you money, how will you be able to change it to be profitable again? How would you understand the inputs behind the robot. Besides, there are lots of currency pairs you can trade. Each one has its own personality and each one has its best hours (when it has more volatility and liquidity).
3 – Find a reliable broker. I can’t stress this point enough. One of the biggest problems in Forex is that there are lots of scams with brokers. I almost saw it all: from brokers trading against their clients, brokers changing the prices to kick you out of a profitable trade, brokers based in 3rd World countries, brokers that still your money, brokers that don’t even are regulated. Make sure you do a complete research about a broker before you open a real account with them. Ask around, find out at how long they are registered, check out their history and one of the most important things, ask them questions and see how long they take to answer you. Remember that you’ll be putting your hard-earned money in their hands. And there are a lot of brokers out there. Don’t make a quick assumption and send them money. Take some time because it will definitely be worth it.
i really love your advise, it is worth it.
i am just beginning and have equally lost some money in the past.
however, i have learn t my lessons .
thank you,
Chris from Nigeria
i want to know what the best techinal indicators are, please.
thank you.
Thanks for your great and invaluable advice. It is most encouraging and reassuring to we beginners. It does help to manage and control the risks in this high risk environment.
Thanks.
Ben from Nigeria
so how do i get to know who is ok.
You’re welcome Chris. I’m glad to hear you’ve learned your lessons. If you keep learning from past mistakes you’ll be headed to success
Best of luck.
Dear Stew: there’s not a single indicator that works as a magical bullet in this market. Different traders chose different indicators based on their experience and on their favorite timeframe.
I personally love the awesome oscillator, the MACD and the RSI (the RSI just for longer time frames like the daily and weekly chart).
Moving averages are also useful to spot the trends, but I prefer to keep my charts as simple as possible, so I usually look at the RSI and MACD on the larger time frame and the Awesome oscillator on the shorter time frame to spot good entry points.
Dear Osi,
I wrote an article about how to find a decent broker. You can check it at http://welearnforex.com/4-tips-on-how-to-choose-a-good-forex-broker%E2%80%A6/
Good luck