Everyone can participate in foreign exchange trading at any time due to the low minimum stake and the fact that you can speculate on currency rates from your home PC. Nevertheless, it is of great importance that beginners first deal with the matter and learn how to trade foreign currencies as successfully as possible.
Forex Brokers : There are now numerous tips and tricks, which often come from experienced traders and help newcomers in particular to improve their chances of success, sometimes considerably. We would now like to give you ten of these tips and tricks,
Tip 1: Find out about the most important terms
The first tip when it comes to forex trading is that you should first familiarize yourself with the terminology. There aren’t many, but very important and commonly used Forex terms that you simply should know. This includes, for example, the following technical terms:
- Margin
- Spread
- Lot
- Leverage (Hebel)
- obligation to make additional payments
- position size
- Stop-Loss
These jargon and a few other terms are commonly used in the context of Forex trading, so you should at least understand their basic meaning.Tip 2: Decide on the right broker for you
Choosing the right forex broker is a very important prerequisite for trading in foreign exchange that is as successful as possible in the long term, although this is not recognized by many traders in this form . It does not always have to be the forex broker with the most favorable conditions, but characteristics such as good customer service, the German language on the website and customer support and also the trading platform are decisive elements that make a broker what it is. When comparing the providers, you should therefore place greater value on the following points in particular:
- Functionality of the trading platform
- Ease of use of the trading platform
- Availability and competence of customer service
- Customer support and website in German
- Selection of forex pairs
- Conditions such as minimum trading amount or minimum deposit
- Training and learning area
- demo account
- mobile Trade
Based on these various characteristics, it is important that you ultimately choose the forex or CFD broker that you are most comfortable with. For example, you should choose a broker whose trading platform you don’t have any problems with, but actually see as a real help.
Tip 3 : Open and use a demo account
A very good way for beginners to deal with Forex trading without having to use real capital is the demo account. This test account is now provided free of charge by almost every broker to simulate subsequent trading. In this context, however, pay attention to some differences between the demo accounts, in particular the period for which you can use the test account. There are definitely bigger differences here, because some brokers only make the demo account available for seven days, while with other providers it is possible to use the virtual trading account and thus the simulated trading environment permanently without any problems. In any case, you should make full use of the opportunity to get to know the trading platform by means of the demo account and to make one or the other trade. In this way, you quickly learn what effects and functionalities the trading platform has with the corresponding orders and where you can use which tools.
Tip 4 : Never become active without a trading strategy
An important piece of advice when trading forex is never without a proper forex trading strategy as a basis to become active. Unfortunately, beginners in particular often disregard this well-intentioned piece of advice by giving orders based on instinct and therefore instinct. This is not only extremely risky, but has almost always been shown in the past to result in the largest losses. Instead, it makes far more sense to read up on trading strategies and then choose at least one strategy that suits you best. The trend-following strategy, for example, is well suited for beginners because it promises a comparatively high chance that, based on the respective trading signals, more profits will be made with this strategy than losses will occur. However, this trend-following strategy does not guarantee success either, so there is always a risk of losses.
Tip 5 : Start with standard currencies
In the beginning, when trading forex, you should primarily or exclusively opt for so-called standard currencies. Compared to exotic and less frequently traded currencies, these have the advantage that they have a significantly lower range of fluctuation and thus the price changes can be estimated somewhat better. In addition, liquidity problems with standard currency pairs are almost never encountered, so your orders can be filled immediately. On the other hand, with somewhat rarer, so-called exotic currencies, there is always the risk that the prices can change drastically even with smaller trading volumes, which can lead to high losses in a very short time. So if you’re just starting out in forex trading, it’s a good idea to speculate on the following currencies in particular:
- Euro
- US-Dollar
- Swiss franc
- British pound
- Japanese yen
Tip 6 : Find out about social trading or copy trading
Of course, novice forex traders may not have nearly as much experience and information as traders who may have been in the forex market for years. More and more brokers are therefore providing extremely good help, namely so-called social trading, which is sometimes also called copy trading. In this regard, beginners have an opportunity to observe the activities of professional traders and even copy them. So you learn directly from the behavior of experienced traders what mistakes are made and what a good strategy can look like. With copy trading, it is also possible to easily copy the visible trade orders of the traders you are following. A list of all brokers that offer social trading you’ll find here.
Tip 7 : Limit your capital investment without exception
So that you don’t get caught in a dangerous spiral of wanting to compensate for realized losses by trading again immediately and possibly making even larger losses, you should strictly limit your capital investment. It is important to stick to your own limit and not to think that you can simply compensate for unforeseen losses with the next trade. There is also a guideline in this case, because many experts recommend that you invest a maximum of five to ten percent of the capital that is available to you in foreign exchange trading. In addition, you should not place the total bet on a single position, but spread it across several currency rates.
Tip 8: Trade with limits and use stop-loss orders
Loss hedging and position hedging is a very important part of a successful trader trading forex pairs. First of all, it is important, especially with currencies that are traded a little less, that you always set a limit for both buy and sell orders. This protects you from nasty surprises, namely that the price increases drastically when you buy, for example, so that you buy at a much more expensive price than you had actually planned. You can prevent this by placing a so-called limit order. However, it is at least as important to protect the portfolio position from excessive losses. You can ensure this relatively easily, namely by placing a so-called stop-loss order. This order ensures that an automatic sale of the currencies in the portfolio takes place if the exchange rate XY, which you previously specified, is reached. As You can read about how to use stop loss and limit orders correctly in an extra guide. Note, however, that some brokers have different types of stop-loss orders, such as the normal stop-loss order or the guaranteed stop-loss.
Tip 9 : Take stock at regular intervals
In order to be consistently successful in forex trading, it is very beneficial to learn from mistakes made in the past. This requires you to take stock at regular intervals and look at which trades made you profit or suffered losses. Sometimes it can make sense to draw the conclusions from this, for example to invest in a different currency or to use a different trading strategy. It is therefore important that you regularly check both success and failure and analyze errors.
Tip 10 : Never count on regular success
There are numerous dubious advertising videos, especially on the Internet, which suggest that you could achieve lasting success with forex trading, which is expressed as a kind of regular income. We consider this assumption to be extremely dangerous, so you should not make the mistake of counting profits from forex trading in the form of regular income. While it is possible to have consistent success trading Forex, there is never a guarantee. Even the best and most professional trader never knows with 100% certainty how prices will behave.
