Forex is a market where traders buy and sell currencies. It is the largest financial market globally, with more than $1 trillion changing hands daily. Millions of retail brokers around the world are trading in this market.
How to start trading forex?
Defining your ultimate goal is the first step in kickstarting your forex investment journey. What do you want from this trading experience? Are you looking for extra income, or would you rather have it as a part-time job?
The second thing to consider is finding a broker that can offer decent spreads and commissions. Third, you would need to decide on your forex trading platform. Here is where you and the broker meet and it involves learning how to start trading by reading charts and signals correctly, and you can start with Juno Markets Broker.
The fourth step involves opening an account with your broker and depositing a certain amount for trading purposes. Alternatively, you can consider taking a demo account to help you learn forex trading and how to avoid losing much money should your trade goes wrong.
Characteristics of a successful forex trader
- A successful trader needs to have discipline and patience.
- Successful traders are self-motivated people.
- Prudent traders manage risk well; even if they expect success, they will still manage their money accordingly.
- They are willing to learn, experience, and adapt to the forex market.
- They are emotionally stable people. They do not get overexcited when things go their way or get depressed when times are tough.
- Successful traders limit their risks by holding on to winning trades and cutting off losers.
- They make sure they have the right forex trading signals.
- Successful Forex traders do not overtrade. They are patient with their trades and give each trade a chance to work out the way it is supposed to
- They have good money management skills.
- Finally, you ought to understand that everyone makes mistakes, and the best thing is to learn from them.
Trading strategies for Beginners
Most of the current trading strategies stem from the traditional approaches, which form the foundation of most technical analysis tools and will help you understand how markets work. Here are some of the most commonly used strategies for Forex traders:
When liquidity decreases, fewer people are trading, which results in a higher spread (difference between the bid and ask price), so it is difficult to analyze trends, which can cause a trader to lose money by entering trades too early.
On the other hand, an increase in liquidity causes low spreads, which allow traders to enter orders more quickly. The liquidity of a currency pair changes throughout the day depending on various factors such as time, economic activity in the countries whose currencies are in question, and even social events.
Simple moving average (SMA)
The moving average strategy works by adding the closing price of a currency pair and dividing the number with time periods. Contrasting to other more complex types, this one is relatively easy to use, and it automatically provides signals when a trend begins or reverses.
Exponential moving average (EMA)
EMA reacts quickly to new data points and gives more weight to recent prices. Traders use these averages when they want to forecast short-term price movements. The general rule of thumb with these averages is to look for short-term EMA’s moving in the same direction as long-term EMA’s.
Like moving averages, pivot points determine a currency pair‘s future support and resistance level by studying historical data.
Your final Take
Foreign Exchange trading is a big and exciting world, but unfortunately, it can be overwhelming for newcomers. This article guides you on how to start trading forex and make prudent decisions as a trader. Once you learn how forex works, you can expect to see your trading account balance increase, but it will take time and effort on your part.