Forex trading has become very popular. The internet has certainly helped facilitate this. As with anything that is popular you are certain to find a vast amount of information on the internet.
If you are just starting out as a Forex investor, or if you are thinking of dipping your inexperienced investing toe into the Forex pool, the main question for you is: how do you trust all this information? Everyone claims to be an authority and yet you will find contradictory claims. As Kristian Jacobs says:
Some say Forex trading is simple…while others argue that it’s not, and all depend on the dollar amount you put at stake.
What follows is an attempt to offer some sound tips to help you find the best Forex advice and make a sensible start in Forex investing.
Choose a Broker Who Matches Your Personality
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Your broker will become the most important person in your Forex trading life. Therefore, you have to feel comfortable with him or her. You need to feel comfortable asking questions, however silly those questions may appear. For example, you are going to be introduced to a whole new language. Forex trading is no different from any other profession in having its own jargon. You may be quite content with leaving all this to your broker but it is much better if you have some idea of what’s going on.
A second point to consider when choosing a broker is that we are all different. Some of us like taking risks; some of us are highly cautious. You must find a broker who is in tune with your personality. Choosing a reputable broker, says Selwyn Gishen,
Is of paramount importance and spending time researching the differences between brokers will be very helpful. You must know each broker’s policies and how he or she goes about making a market. For example, trading in the over-the-counter market or spot market is different from trading the exchange-driven markets.
How Do You Find A Reputable Broker?
You can ask this question about any professional. There is no simple answer. Some obvious tips are to talk with other people. If you know people who are trading in the Forex market, they will probably be your starting point.
Don’t be slow in using your network connections, whether they are physical connections or virtual ones on social media sites like LinkedIn and Facebook. You could try sending a tweet asking for advice; you’re bound to get quite a few replies.
Of course, make sure you talk with potential brokers. Go along armed with some questions. If you don’t feel comfortable talking to a prospective broker, the relationship won’t work.
Don’t Run Before You Can Walk
The temptation is to look for quick returns: and who can blame you for that? However, it is wise to start slowly. Get used to what you are doing: there is no substitute for gaining experience. What you don’t want to do is suffer big losses almost as soon as you start. A smart tip comes from forexfraud.com:
One of the best tips for trading forex is to begin with small sums, and low leverage, while adding up to your account as it generates profits. There is no justification to the idea that a larger account will allow greater profits.
Take Stock of Your Financial Position
I guess this is a continuation of the point about not running before you’ve started walking, and the point is equally important. It cannot be over-emphasized that if you choose to trade on the foreign exchange markets you are taking a risk. You may be very happy with taking risks. Always keep in the forefront of your mind, though, that there is a chance that things could go wrong; therefore, you need to be in a position so that any losses will not be financially ruinous.
Before you start to trade take a long hard look at your financial position. Consider taking advice about this. The one thing you should never do is to use money to trade on the foreign exchange markets that is earmarked for day to day living. Nial Fuller offers this advice if you intend to fund your trading,
With money that you might possibly need for any living expense [then] you are not ready to trade. You need to have disposable risk capital that you are totally OK with losing; this is the first step in developing the proper habits of a successful forex trader.
If you are using money to trade that you need to live on you will find it hard to remove the element of emotion from your trading (see below on why emotion and trading are not a good mix).
Taking things a little further, it is good advice to do some demo trading for a while before you take to the real thing. Of course, you are very eager to get started. Of course, you may be very angry if you make a good return and you are demo trading. However, this has to be balanced at how relieved you will be if you take some losses.
Take the Emotion Out of Trading
I mentioned above that we are all different. Human beings often make decisions based on emotional considerations. Some of us do this more than others. Making decisions that are not made on sound rational bases are not good decisions when it comes to trading. One answer is (as far as possible) to ensure that your calculations are automated.
Don’t be driven by greed. This can get in the way of making sensible, rational decisions. Of course, you want to make money. That’s why you are trading. However, when you see your investment rising, don’t be tempted to hang on that little bit longer in the face of the advice of your broker.
Conclusion
There is no doubt that trading on the Forex markets can be a very rewarding experience. But you need to do things right. Don’t allow a sudden rush of blood to the head force you into making avoidable mistakes.
Life has never come with any guarantees. Forex investing has its risks. Your aim is to minimize those risks and enhance your chances of gain. The above advice offers you a sound platform to start from.
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