Forex trading can result in significant losses for inexperienced and undisciplined traders; however, the correct type of forex trading advice can give you the best possible chance to be one of the traders who makes a profit. Here are 20 forex trading tips that you can use to avoid disasters and maximise your potential in the currency exchange market.
1. Have a Solid Risk Management Strategy
It is vitally important as a trader to put a solid risk management strategy in place and never to risk more than you can afford to lose. Make sure you fully understand how leverage works, so you can control how much you use according to your appetite for risk. Other risk management techniques you might want to use include setting stop-loss and limit orders and defining a risk/reward ratio that you apply to every trade.
2. Plan your goals. Stick to your plan
Once you know your trading goals, you must systematically define a time frame and a working plan for your trading career. What constitutes failure? What would be described as success? What is the time frame for the trial-and-error process that will inevitably be an essential part of your learning? How much time can you devote to trading? These and similar questions must be answered so you can set trading goals and devise a plan to meet them. Clear goals will also make it easier to ascertain if forex trading is really for you or if another strategy would suit you better.
3.Choose your broker carefully
It is impossible to overemphasise the importance of choosing the right broker for you. Obviously, you will want to avoid fake, unregulated and unreliable brokers and match your expertise level and trading goals to your broker. What kind of client does the broker aim to reach? Does the trading software suit your expectations? How efficient is customer service? What is the minimum deposit? All these factors must be examined to determine if a broker is right for you. Please refer to our forex broker reviews to find a reliable broker that suits your trading style.
The Safest Forex Brokers
The best way to avoid scams is to ensure you always trade with a regulated broker. This is why we have listed below the safest forex brokers for you to trade with
| Broker | Features | Min Deposit | EURUSD Spread | ||
|---|---|---|---|---|---|
 Your capital is at risk
US Clients: No Regulated : Yes
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– Regulated by FCA, FSCA, CMA and FSC |
$200 | ECN 0.1, Standard 1.6 | ||
 Your capital is at risk
US Clients: No Regulated : Yes
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– Flexible leverage up to 500:1 |
$200 | From 0.1 | ||
 Your capital is at risk
US Clients: No Regulated : Yes
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– 40% New Member Bonus
|
$100 | Fixed |
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Europe* CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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 * 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
US Clients: No Regulated : Yes
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100GBP/AUD/EUR/USD | variable |
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* 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
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 Between 74-89 % of retail investor accounts lose money when trading CFDs
US Clients: No Regulated : Yes
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$200 | NDD 0.09 / Standard 0.69 |
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Between 74-89 % of retail investor accounts lose money when trading CFDs
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4. Pick your account type and leverage ratio per your needs and expectations
You must also choose the account package most suited to your expectations and knowledge level. The various types of accounts offered by brokers can be confusing initially, but the general rule is that lower leverage is better for beginner traders. If you have a good understanding of leverage and trading in general, you can be satisfied with a standard account. If you’re a beginner, you will want to practice using a mini account and preferably a demo account. Trading with low leverage, especially at the beginning of your career, will help you avoid costly mistakes.
5. Begin with small sums and increase the size of your account through organic gains, not by bigger deposits
One of the best forex trading tips is to begin with small sums and low leverage and use any profits generated to reinvest. There is no justification for the idea that a more significant account will allow greater profits when you are a brand-new trader. If you can increase your account size through your trading activities, that is the perfect strategy for a new trader.
6. Focus on a single currency pair and expand as you better your skills
The world of currency trading is deep and complicated due to the chaotic nature of the markets and the diverse characters and purposes of market participants. It is a great idea to restrict your trading activity to a currency pair which you understand and with which you are familiar. Beginning with trading the currency of your home nation can be a great strategy. Alternatively, you can stick to the most liquid, widely traded pairs to start with. Following news events that can impact major currency pairs is vital for all traders.
7. Do what you understand
Simple as it is, failure to abide by this principle has been the doom of countless traders. In general, if you’re unsure about something, that is a sign that you need further forex education before doing more trading. Do not trade based on hearsay or rumours, and do not act unless you’re confident that you understand both the positive consequences and the potential adverse effects that may result from opening a position.
8. Do not add to a losing position
While this is just common sense, not all traders follow it. Nobody knows where a currency pair will be heading over the next few hours, days, or weeks. There are lots of educated guesses but no guarantees. Generally speaking, adding to a losing position is not advisable unless you love gambling. A position in the red can be allowed to survive on its own in accordance with the initial plan but adding to it is not a good idea.
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9. Restrain your emotions
Greed, excitement, euphoria, panic or fear should have no place in traders’ calculations. Yet traders are human beings, so it is obvious that we have to find a way of living with these emotions while simultaneously controlling them and minimising their effect on our trades. That is why traders are always advised to begin with small amounts. By reducing our risk, we can be calm enough to realise our long-term goals, reducing the impact of emotions on our trading choices. A logical approach, and less emotional intensity, are the best forex trading tips necessary for a successful forex trading career.
10. Take notes. Study your success and failure
An analytical approach to trading does not begin and end at the fundamental and technical analysis of price trends or the formulation of trading strategies. The successful trader will keep a trading journal, documenting his trading activity and allowing him to carefully scrutinise his mistakes and successes to find out what works and what does not. This is one of the most crucial forex trading tips that you will get from a good mentor.
11. Automate your trading as much as possible
We have noted the importance of emotional control in ensuring a successful and profitable forex trading career. One of the best courses of action to minimise the role of emotions is the automation of trading choices and trader behaviour. This is not about using forex robots or buying expensive technical strategies, although some traders find that works for them. It is about setting points at which you will enter and exit positions to stay disciplined and limit emotional trading decisions.
12. Do not rely on forex robots, wonder methods, and other snake-oil products
There are all sorts of trading tools that are extremely popular these days. Some generate significant profits for their sellers but little in the way of gains for their excited and hopeful buyers. While there are some helpful trading tools out there, be very wary of ‘magic bullets’ or ‘trade secrets’ that other traders will try and sell you. Many of them are scams or simply not that effective. Always do your research on any trading tool you are interested in using.
13. Keep it simple. Both your trade plans and analysis should be easily understood and explained
Forex trading is not rocket science. There is no expectation that you be a mathematical genius or an economics professor to acquire wealth in currency trading. Clarity of vision and well-defined, carefully observed goals and practices offer the surest path to a respectable career in forex. To achieve this, you must resist the temptation to over-explain and overanalyse. The simpler your analysis of a situation is, the easier you will find it to avoid it in the future.
14. The Trend is Your Friend
Generally speaking, it is always wise for beginners to trade with the markets, not against them. The more experienced trader might want to risk trading against market trends or picking tops and bottoms by betting against the main forces of market momentum. For less experienced traders, however, it is best to trade with the trends so that you can relax a little. Remember, you can use various technical indicators to monitor trends and help you identify when to open and close your positions.
15. Understand that forex is about probabilities
Forex is all about risk analysis and probability. No single method or style will generate profits all the time. The key to success is positioning ourselves so that the losses are harmless while the profits are multiplied. Such a positioning is only possible by managing our risk allocations in accordance with an understanding of probability and risk management.
16. Be humble and learn from your mistakes
To improve as a trader, learning from the trades that go against you is vital to see how you can do things differently in the future. Did you misread what was happening in the markets, get too ambitious, or let your emotion get in the way of disciplined trading? Maybe you acted on a false signal without cross-referencing to ensure it made sense. Recognising and analysing your mistakes will help you improve and make more profitable trades as you gain experience.
17. Seek out advice but follow your judgement
While it is a great idea to discuss forex trading with others and listen to a range of forex trading advice, you should be the one making the decisions. It is essential to learn from others and consider the various aspects of the markets that other traders will inevitably be discussing; however, you must also learn to make your own choices rather than blindly follow the crowd.
18. Study money management
Once we make profits, it is time to protect them. Money management is about the minimisation of losses and maximisation of profits. To ensure you don’t gamble away your hard-earned profits, learn to “cut your losses short, and let profits ride”. Study money management principles to ensure you are doing everything possible to protect yourself and your money.
19. Study the markets, fundamentals, and technical factors leading the price action
It is no accident that this tip is placed so low on the list. Faulty analysis is rarely the cause of a wiped-out account. Other issues related to money management and emotional control are far more important than analysis for the beginner. However, as those issues are overcome and steady gains are realised, traders can earn a further edge by employing successful technical and fundamental analysis of the markets. After developing a proper attitude to trading and risk-taking, analysis skills can help improve results.
20. Don’t give up
Finally, provided that you risk only what you can afford to lose, persistence and a determination to succeed are great advantages. It is doubtful that you will become a trading genius overnight, but if you follow our forex tips and tricks, you will give yourself every chance to develop your skills and talents and become a successful forex trader.
Have our forex trade tips whetted your appetite? Be realistic (bonus tip)
It has to be said that even if you were to follow our free trading tips rigorously, there are still never any guarantees in the forex world. It is very much about being on the right side of winning trades more often than losing ones (because like it or not, they will be a feature). Just be realistic about what you can expect, particularly if you are nearer to being a beginner than an expert.
If you are realistic about your goals, persistent, and patient, you will go significantly further than most. Usually I like to round up with a recap, but with 20 tips that will take a while and if you have stuck around this far there may be other things to be getting on with. In any case, feel free to bookmark this page and revisit these whenever you need a reminder.
Good luck, and happy trading!