Forex Trading for Beginners: Where do you start? (Part 2)

Filed under: Learn Forex Trading |

(Continued from part 1…)

 

Risk Management

Forex trading for beginners is a slippery slope. You make a couple of profitable trades and you think you’re invincible! You start risking more than you should and soon enough, your trading capital is gone. Money management is key for beginners to forex trading and experts alike. This means not risking more than 2% on any single trade – and that is a maximum, and can be much less.

 

Setting Stop Losses

When putting a trade on, you should always set something called a ‘stop loss’. Stop losses are an insurance policy. If a trade moves against you, you should not hold onto it hoping that it will come good in the end. Beginners to forex trading often make this mistake. You should take the loss and move on. Stop losses help you to do this. Never risk more than 2% of your bank on any trade, and stop losses will make sure that you stick to this rule.

 

Be Unemotional

Forex trading for beginners is always an emotional affair – especially if it is with real funds. However, you must learn to take losses as a part of the process; and you must not get greedy with the good trades. Stick to your predefined stop losses and profit targets and be as unemotional as you can. You should not be feeling elation or gloom. Trading is a process and there will be natural cycles of peaks and valleys.

 

Forex trading is tough for beginners. Is it so easy to be attracted to easy options such as signals providers or trading robots, which do all the work for you. But in the end, the vast majority of these services are scams and it is best to learn for yourself. It will not be easy, and you will need to put a lot of practice in, but eventually, you will start to make some headway. Forex trading for beginners is not for the faint-hearted. Stick to a demo account for a while – at least until you can be profitable for three months in a row; and if you can do that, then you just might be ready to start trading with live funds.

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