7 forex trading tips and tricks you want to know!

Are you looking to get into forex trading? Read on to see which 7 tips and tricks we think you need to know.

Forex might seem tricky to get started with, but you can quickly learn what’s what if you’re willing to put in the time, though knowing where to look is helpful. In this article, we’ll share 7 tips and tricks that can help you become a foreign exchange expert, and explain why they’re helpful for novice traders.

1. Start small

You have to start trading somewhere. When you first start out, it’s advisable to keep your stakes small, so play it safe and don’t overstretch yourself.

Many new traders make the mistake of trying to get rich quickly, leveraging too much and not using a safe or sound strategy. Your best bet, pardon the pun, is to start small whilst you’re getting to grips with forex and only increase your risk with time.

2. Don’t risk more than you’re willing to lose

This is similar to the first tip but also worth mentioning in its own right; don’t risk any more money on a trade than you’re comfortable with losing, as there’s always a chance things could go against you. The probability might seem small, but there is still a possibility your trade could go south.

There are things you can do to minimise this, but one of the fundamental things that any trader, new or experienced, should do is not take risks that could leave you short. Only use money that you have or can access.

3. Use stop-loss orders

These are orders which automatically close your position at a specific price, meaning that even if the market does move against you, your losses will be limited. They can be very useful for managing trades but should be used with care as they can also limit your profits if placed too tightly.

They are especially handy for beginners as you may not have the time available to be able to watch the markets at all hours, especially if this is just a hobby or side hustle alongside your full-time job. Stop-loss orders can help reduce the risks and set in place some measures to protect you.

4. Follow news and economic releases

Keeping up-to-date with what’s going on in the trading world is crucial for forex trading as economic events can have a significant impact on currency prices. For example, if a country’s interest rates rise, its currency will usually strengthen as investors seek to take advantage of the higher returns on offer.

It’s often said that knowledge is power, and this is never more true than in the trading world. Despite this being seemingly obvious, you’d be surprised at how many traders aren’t up to date with current developments, so you can and should use this to gain an edge and make some good returns.

5. Have realistic expectations

It’s important not to expect too much from forex trading; even experienced traders can go through periods of losses, so don’t expect to make huge profits every single month. Instead, focus on gradually building your account up over time, and remember that consistency is key.

Rome wasn’t built in a day, and your trading empire won’t be either. Set a smaller goal instead of aiming to have returns big enough to buy your dream home right away. Why not set a goal of £1,000 in profits so you can treat yourself to a fun holiday. Aim small at first and then scale up with time.

6. Keep a journal

A journal can be beneficial for keeping track of your trades, analysing your performance, and spotting any areas which need improvement. It’s also an excellent way to stay motivated as you can look back and see how far you’ve come over time.

There’s nothing worse than making a trade when you’re half-asleep and then forgetting about it, only remembering when it’s too late, and you’ve missed your chance. It happens to the best of us, but by having a journal or spreadsheet, it’ll definitely happen much less often.

7. Use a demo account

Demo accounts are an excellent way to get started with forex trading as they allow you to practice. This is a great way to test out different strategies and get a feel for how the markets work before committing any capital.

Most brokers now offer this option, and we think it is great if you want to get a grip of the trading platform before you go all-in. This can be useful even for experienced traders as all sites are different, and we’d hate for you to find that out when your money is on the line.

So there they are; our 7 best tips and tricks for forex traders. What did you think? Did we miss anything? We believe they are 7 of the most important things that any traders should know if they’re trying to enter the forex world but do let us know in the comments if you have any other suggestions.