This article provides some tips on how to trade effectively on the foreign exchange market. Many new traders enter the foreign exchange market with the belief that there is a secret strategy to making tons of cash. Usually these traders are those who believe that forex is a get rich quick scheme. Unfortunately, this is not true. In fact, only approximately 10% of foreign exchange traders make a steady income off the forex market; the rest profit but will most of the time just breakeven. Yet, money can be made on the foreign exchange market if you trade efficiently. This requires a great deal of preparation and acceptance that there is no secret formula. This article will provide some tips on how to trade the market effectively.
The first tip is to gain an education before entering the foreign exchange market. Many new traders are very eager to being trading on the forex market and ignore official training, this is a mistake. The foreign exchange market requires specific skills and an understanding of certain technical terminology. If you are unaware of these aspects then the chances of detrimental losses are greater than profits. Foreign exchange training opportunities are available in various forms with the most popular being online training courses. These courses can be likened to distance learning programmes as all the academic activity is completed online via emails and online presentations. The majority of courses last between 6-8 weeks and you will be allowed to keep all material after the course is completed. The cost differs dependent on the course, and some programmes are free of charge. A second option is the mentorship programme. This opportunity is recommended for the more experienced trader or those with a basic understanding of forex trading. One will shadow a forex trader and learn from practical experience; therefore the focus is on strategy development and implementation. The cost is usually great, definitely more than the online courses.
The foreign exchange demo account
It is recommended that all new traders utilise a demo account before entering the forex live market. This allows you to develop a trading plan and strategy suited to your personality and capabilities. Of course, you must find the correct trading platform to suit your trading needs. The most effective trading platforms will have built-in trading tools such as forex charts and signals. They will ideally have forex news feeds and report features. It is recommended that you find a demo account whereby you can adjust certain aspects of the simulation. Some traders will experience a negative transition to the forex live account because of unrealistic leverage and high capital amounts on the demo account, which is not available on a live account. By altering these on the demo you will have a smoother transition to trading on the live market.
While technical preparation is important, one must also prepare for the mental hurdle one may encounter on the foreign exchange market. Many new traders will find themselves engaging in emotional trading if they are not disciplined enough to adhere to their trading plan. Unfortunately, demo accounts do not help in preparing for mental pitfalls; therefore you must learn to control emotions via forex training and independent research on psychological coping mechanisms.