10 Broker Tips for Beginners: Strategy and Psychology

If you're a Forex beginner and have recently approached this interesting but complicated activity, you shouldn't act impulsively or improvise. In fact, this is precisely the way to lose your capital and preclude yourself from a trader career forever. To avoid this unpleasant inconvenience, you should follow some tips regarding the broker, strategy, operations, psychology, and much more. Below, we list some tips that you can follow with relative ease. Some may seem counterintuitive or, at best, superfluous, yet you should trust them: all traders who started from a disadvantaged position or from zero and became rich and famous have followed these few simple tips.

Choose a goal compatible with your trading style

There's trading and trading. The way of conducting one's career, of investing in the foreign exchange market (as in any other market), can vary based on numerous factors. Certainly, capital matters, but the element that impacts the most is risk propensity, which in turn determines or should determine the objectives. It's obvious: if you have minimal risk propensity and are instead guided by a principle of absolute prudence, your operations and objectives change accordingly. Specifically, the operations should include a supplementary portion of Money and Risk Management, and the objectives should develop over the medium to long term. As in all complex activities, in Forex Trading, it's also essential to know or identify both the "rhythm" and the objectives. Therefore, before acting in the market and jeopardizing your capital, define these aspects. Do it clearly, setting your feeling and real possibilities as a reference, without biting off more than you can chew.

Pay attention to the broker and platform

Among the many technical issues that an aspiring trader must face, the broker issue stands out. The choice of broker should not be taken lightly, especially since the broker is, to all intents and purposes, the entity that connects the trader with the actual market. This is especially true when choosing an ECN broker, as is the case in most instances. Which broker should you choose? Let's start by saying that the offer of brokers is truly endless. There are dozens of them, and all, at least at first glance, seem reliable. Yet one broker is not the same as another, in the most absolute way. The advice is to choose, first of all, a broker that boasts a certain authority and is therefore well-known. Secondly, analyze the offer of instruments and the approach to prices. While an abundance of investment instruments is always welcome, excessive convenience should make you turn up your nose. From this point of view, the healthy middle ground never betrays. Connected to the choice of broker is the choice of platform. In fact, they are often "offered" as a single package, or there is a constraint (broker X offers only and exclusively platform Y). In any case, pay attention to the platform: it must be fast, understandable, and rich in tools. Proprietary or external platform? It's not possible to offer an answer that applies in all cases. The advice, however, is to opt for an external platform, if known (MetaTrader for example), if you don't have specific, detailed, and irrefutable information about the alternative represented by the proprietary platform.

Establish a routine

This is a piece of advice that is often not followed. In fact, it's the beginners who struggle the most to build a routine or don't even think about it. The reason is quite simple: those who have recently approached Forex consider it an activity with an uncertain outcome (as is logical and physiological), so they more or less unconsciously assign it a sporadic role within their day. Yet, as soon as possible, you should create your own routine. In general, a routine is useful for optimizing time and performance, especially when activities are characterized by a certain complexity (and Forex is undoubtedly complicated). Therefore, a routine trader not only knows perfectly what to do and how to do it but also does it well. The routine should be circumscribed from a temporal point of view (that is, dedicate a specific time slot to trading) but also from an operational standpoint.

Synchronize timeframes

This is a problem that mainly concerns beginner traders who use external signals. This practice is legitimate and also very useful if carried out with awareness and purged of all those elements that can make it risky. Among these elements, the issue of timeframe stands out. It can happen, in fact, that a signal is elaborated and "demonstrated" starting from a specific timeframe, and that this does not perfectly coincide with the timeframe used by the trader. At that point, having become aware of the most appropriate entry and exit moments, their analyses may not coincide with the evidence of the signal. What to do in this case? The idea is not to mix apples and oranges. That is, to always use a uniform timeframe even when receiving signals. It's up to the trader to decide whether to adapt the signal source to their own timeframe or adapt their own timeframe to that of the signal. The advice is to opt for the first alternative.

Perform back-tests

Back-tests are fictitious operations carried out on a past market environment, therefore not real. They answer the questions: would this strategy, this way of operating, have borne fruit in the past? It's not an idle question; in fact, it serves to understand if a modus operandi can work in the present. After all, if something worked in the past, why shouldn't it work today? Back-tests, therefore, represent a fundamental resource for testing strategies before applying them to one's trades, before investing money in them. Obviously, they are quite complicated to do and require data on previous sessions that are as varied as possible. Fortunately, they are made available by many brokers. An alternative to back-tests is demo accounts. These, in fact, are not only resources for those who need to complete their training path but also for those who, perhaps inexperienced but not an absolute beginner, intend to test a strategy.

Accept defeats

This is an important piece of advice, perhaps the most important of all. Beyond the technical issues, which can be experienced without great emotional expenditure, the psychological issue must be considered. In trading and particularly in Forex, it is predominant. It's impossible to make a career or at least earn from one's investment activity without facing and resolving the psychological issue. Yes, there is always something to resolve, even if the trader has no emotional problems and is psychologically absolutely normal. The issue consists in accepting some phenomena that are counterintuitive and that can destabilize the trader from an emotional point of view. This is an eventuality to pay attention to, considering that trading is already destabilizing in itself, given what is at stake. One of the great truths that a Forex beginner must digest is that defeat will always be part of their life as a trader. Even if they become rich, defeat would always be a reality to come to terms with. The fundamental issue is how much you lose and how much you win, but the loss is not in question. It must therefore be accepted as a physiological occurrence, as part of the game. It's not simple, also because the trader generally ties a piece of their self-esteem to the trader's fortunes, a bit like what happens in real life when achieving something important.

Don't change strategy often

There is a saying that "a winning team doesn't change." An unwritten corollary, but put into practice by many at all levels, could be "a losing team changes." That is, when a method doesn't work, it gets shelved. Does this also apply in Forex Trading? Obviously yes. However, there are some "buts" and "ifs" to consider. In a nutshell, before declaring a strategy dead or declaring it unusable and harmful, some time must pass. That is, it is necessary to put it through tests and counter-tests. This is absolutely necessary since trading is not an exact science but only an activity based on statistics and, therefore, on probabilities. There are no written truths in trading, only probable and less probable events.

Don't sit idle during the weekend

One of the most appreciated aspects of Forex is its very flexible hours. The foreign exchange market is available twenty-four hours a day, five days a week. The only times when it is not possible to do Forex trading, therefore, are Saturday and Sunday. This does not mean, however, that they are days to be forgotten or not exploited. While it's true that exchanges stop during the weekend, the same does not happen for the dynamics and events that, from the following Monday, will impact currencies. Therefore, the advice is not to sit idle but to monitor the economic, financial, and political context, so as to arrive prepared at the umpteenth starting line.

Keep a diary or a log

Not many traders keep a diary or a log. After all, it's a rather boring activity, if not even tiring. Yet it's something indispensable for those who intend their trading career in a progressive sense, a path of trial and error, of continuous empirical learning. Keeping a diary or a log means being able to visualize one's mistakes transparently and clearly and, therefore, remedy them or simply not repeat them anymore. It's not a trivial dynamic; in fact, it's the only one that, in Forex trading as in life, allows for quick improvement. Obviously, a certain amount of patience and a willingness to admit mistakes are necessary.

Don't stop studying

Obviously, all aspiring traders know that before starting to trade, they will have to study. Fortunately, the training path preceding the market debut is seen by everyone with a certain importance. However, and this is quite counterintuitive, the path should not end once the market debut is made, not even once one has become - in various capacities - an expert trader and professional. There is always something to learn, also because the market, while having a certain cyclicality, undergoes a perpetual evolutionary process. Not to mention the technical tools and strategic models that emerge and spread and that therefore need to be studied.