Many novice traders enter the world of Forex without proper Forex training and knowledge. They often have certain expectations, such as generating additional income alongside their primary job or considering it as a full-time career, based on what they have heard or seen. However, entering this profession with such expectations or without sufficient knowledge and awareness can lead to mistakes right from the beginning.
One common mistake is the lack of understanding of the trading process and the development of negative habits. Beginner traders gradually develop certain habits, which is why we have prepared a list of habits that beginner Forex traders should try. These habits will have a positive impact on their trades, increasing the likelihood of success and profitability in this profession.
Using a trading journal:
We understand that as a novice trader, you may not be familiar with the concept of a trading journal. We often come across individuals who do not use a journal, which has a negative impact on their trades. A trading journal is a place where you record everything you do, including the trades you take, the reasons behind those trades, the results, and many other details.
In the future, this journal will help you evaluate your performance and identify your weaknesses by referring back to it. Therefore, it is a valuable tool, and the sooner you start keeping a journal and regularly noting down your trades, the better progress you will experience in your trading journey.
Using stop loss:
A part of your trading plan should involve risk management. This plan includes the use of stop loss, which is essentially a method of automatically exiting trades when the market moves against them by a predetermined distance. Using a stop loss is a habit that you need to develop. This tool can protect a significant portion of your capital or even your entire trading account.
Losses are part of trading, and as a beginner Forex trader, you will experience a fair share of unsuccessful trades. That’s why it is crucial to limit the amount of losses and control the risk level for each trade. While you cannot control the markets, you can determine how much risk you take in each trade. Adjusting or moving stop loss levels when market conditions change is not an issue, but the first thing you should always do is use a stop loss for your trades.
Setting trading hours:
The markets operate 24 hours a day, but it doesn’t mean you have to be active throughout that period. Set a specific time frame for your trading activities. This will help you stay focused when you’re working and ensure that you’re not wasting your time. Avoid trading at all times and treat trading professionally, just like a job. Work during designated hours, and by doing so, you will find it easier to commit to your trading schedule, maintain order, and discipline in your work.
How to trade forex for beginners?
Preparing and setting up a trading strategy and plan before starting to trade makes current and future tasks easier. If you don’t have a plan for your trades, then essentially, in what situations do you trade? You don’t have an answer to this question, and it will result in most of your trades ending in losses.
In this plan, specific rules are established for your trades, which you follow in every trade. By doing this, you work towards your strategy, and if your strategy is properly designed, it will lead to long-term success and profitability in this profession.
Furthermore, having a predetermined plan helps you mentally prepare for trade outcomes and enables you to cope with them. This allows you to be satisfied with yourself and also reduces the level of stress in trading, which is a significant issue in trading.
Best Forex Currency Pairs for Beginners:
Contrary to common belief, choosing the best Forex currency pairs for a beginner trader is not an easy task. Many novice traders tend to gravitate towards currency pairs that they are more familiar with or have more knowledge about. Selecting the best currency pair for a beginner requires time, research, and exploration in forex trading sites.
Euro/US Dollar (EUR/USD):
Among popular currency pairs, the most favored one is EUR/USD. It is the most traded currency pair worldwide, accounting for over one-third of the total Forex trading volume. This is largely due to the size and transparency of the European Union and the United States economies. For beginners, it serves as a good starting point to understand the mechanics of the market.
Advantages of trading this pair include:
- Predictability of the EUR/USD trend, as mentioned.
- High liquidity, resulting in lower spreads compared to other currency pairs. These factors make EUR/USD one of the most predictable and best currency pairs in Forex.
British Pound/US Dollar (GBP/USD):
Also known as the “Cable,” the GBP/USD pair is another excellent choice for beginners. It exhibits strong and direct movements, with greater volatility than the EUR/USD pair. It presents profitable pip opportunities and precise market analysis. While GBP/USD is a good pair for trading, beginners should be cautious of its higher volatility and lower predictability.
US Dollar/Japanese Yen (USD/JPY):
This pair, nicknamed “Gopher,” tends to have stable trends over long periods. It displays low spreads and predictable trends compared to other currencies. USD/JPY provides exceptional trading opportunities and profitability. It accounts for 17% of Forex market transactions and is the second most traded currency pair in the Forex market.
US Dollar/Swiss Franc (USD/CHF):
This pair is a major currency pair and often exhibits a negative correlation with GBP/USD and EUR/USD. Beginner traders often consider this pair as one of the best in the list due to its higher predictability. However, if you are a beginner trader solely relying on technical analysis, it may present some challenges. Due to the strength of the Swiss economy, the Swiss Franc serves as a safe haven for Forex traders during uncertain political and economic conditions.
US Dollar/Canadian Dollar (USD/CAD):
This pair is referred to as “Loonie.” It is significantly influenced by the price of oil in Canada. When the price of oil in Canada increases, the Canadian Dollar strengthens, and vice versa. Trading this pair may not be too challenging for beginners, especially when considering the impact of oil prices.
Pair of currencies EUR/GBP:
One of the best forex currency pairs for beginners is EUR/GBP. It has the least volatility, making it suitable for trading. Traders should pay attention to factors such as recession and economic crises as they have a significant role in its value.
How to make money with forex trading for beginners?
The forex market is one of the high-liquidity financial markets where one can earn a substantial income. Forex trading sites are electronically managed and operates 24 hours a day, 5 days a week. You might wonder if beginners can also earn income from the forex market.
In response to this question, it should be noted that if you are fully familiar with forex terminology, concepts, and strategies, you can earn income from it despite being a beginner.
Earning profits as a novice forex trader is possible, but you need to be patient and disciplined in your approach and strategy.
You can start trading in forex trading sites with a minimum of $100, but you should not expect to earn significant income with low initial capital. If your ultimate goal is to profit from forex trading, you need to fulfill many requirements to meet the necessary standards.
If you want to try forex trading, it is important to:
- Choose a reputable broker.
- Consider implementing a stop-loss order.
- Limit your leverage.
Registering for a demo account is a useful method to learn the principles of forex trading without risking real money, allowing you to understand what forex trading entails and the potential financial risks involved.
It’s important to note that Forex trading involves risks, and beginners should practice proper risk management and gain knowledge through education and experience before engaging in live trading.
