I must admit, the answer to this question is not straightforward. Indeed, the reality is that there are literally thousands of ways to trade Forex.
But most of them aren’t efficient.
In my opinion, it is therefore more important to learn what NOT to do as a beginner rather than learning what to do.
Learning what NOT to do will not only help you avoid bad practices but also focus on what to do!
Here are my 5 best tips for Forex beginners…
1. Do NOT open a live account
As a beginner, the first thing you need NOT to do is to open a live account.
You don’t know how to trade Forex, why would you even risk your capital?
Are you a gambler?
Open a demo account instead.
If you don’t know what a demo account is, it simply is a virtual Forex trading account, using real market data but fictional money.
The demo account is an amazing tool for beginners. Really!
(if you don’t have one yet, simply Google “Forex demo account” and open one)
2. Do NOT believe there is an magic solution to Forex trading
A lot of Forex scams have arisen around the Internet, giving the industry a very bad name. So much that some people believe Forex trading is just a giant scam and doesn’t even exist!
Don’t fall into the traps of greedy marketers (and sometimes even brokers): understand that like with every other skill, it takes time and commitment to learn Forex trading.
Start educating yourself as you play around with your demo account. Read books, blogs and sites about Forex trading (don’t forget to join SurfingThePips.com ).
Forex trading is a massive money-making opportunity but NOT a get rich quick scheme.
3. Do NOT focus on more than 1 pair
You already have a lot to learn. Why would you spread yourself into multiple markets at the same time?
A lot of Forex beginners fall into the trap of trading like if they where playing a video game, simultaneously watching multiple pairs using very small timeframes.
Experienced traders usually focus on a few pairs only (not at the same time) and spend a very limited amount of their time in front of the markets.
At SurfingThePips.com, we suggest you focus on the EUR/USD pair, which is the most liquid &, in our opinion, the easiest one to trade.
4. Do NOT rejoice over the money you have made
When beginning with Forex trading, the (virtual) money made is NOT important.
What? How can I forget about the amount I made?
I know, that’s not an easy one…
However, as you will soon discover this is not the last psychological challenge you will face as a trader.
You HAVE TO always evaluate your results in term of pips made rather than money.
Note: If you don’t know what a pip is, jump to this post…
Focusing on the money will only discourage you and take you away from the big picture.
What is important right now is your return on investment.
Once you have proved to yourself you can make a steady return on investment (in term of pips), will you be able to progressively increase the amount of money you trade.
That being said, it will help you to ALWAYS count in pips rather than money made.
But that’s a psychological factor you’ll discover soon enough when starting to trade with real money! Just trust me on this one….
5. Do NOT quit
Most people fail in Forex trading simply because they quit too early. You got to give yourself enough time to get where you want to go.
Yes you will make mistakes.
Yes sometimes it will be tough.
But if you stick with it and are clever enough to adapt and improve from the lessons you will learn along the way, there is but ONE possible issue:
You’ll become a successful Forex trader.
To help you get through, it is important to regularly look back at what you have learnt so far. You’ll realize learning Forex is not different from learning any other skill: it is a continuous, incremental process made of successes and failures.
All in all, Forex trading is a fantastic way to invest your money & stimulate your brain. It is exciting and rewarding for those who learn to master this skill.
Use these 5 points to embark on this journey and don’t forget to have fun on the way!