Forex Trading for Beginners: 15 Tips to Survive Your Market Debut

Forex Trading is a complex, risky, and difficult activity to learn and practice. Few people achieve significant results. However, those who succeed have excellent opportunities to make it a profession and, why not, become wealthy. To reach this goal, it is necessary to overcome numerous challenges, most of which are positioned at the beginning of the journey. It's true, the most difficult part is the initial stage. Beginners suffer the most. After all, the dropout rate in the first few months is quite high. However, a percentage of those who start manage to continue. Therefore, the mission is possible. It is necessary to "know how to do it." In this article, we offer some useful advice specifically for beginners who fear - not without reason - not surviving (financially, that is) the encounter with the market.

Study

It's the best advice that can be given. We said it at the beginning of the article: Forex Trading is a complicated activity. It follows that improvisation is an approach to avoid. Even a course of study done in a hasty or ineffective manner, although in good faith, can create economic damage, even in the long term. What should a training path be like? It is not simple to give a univocal answer that is valid for every case. In fact, each person starts from a different background of knowledge. Certainly, start from the general theory and then specialize more and more. Use any channel possible, from classic manuals to video courses, from seminars to blogs and forums.

Practice with Demo Accounts

Generally, to practice any activity, it is necessary to get involved in reality and immediately take on the appropriate responsibilities. Fortunately, when it comes to Forex Trading, this is only partially true. Also because if it were not true, beginners would run very serious risks. Fortunately, there are tools that allow you to cut your teeth... Without breaking them. These are Demo accounts. They allow you to trade in the real market but with fake money (even the gains and losses are fake, obviously). Thanks to Demo accounts, an aspiring trader can safely complete their training path. There is a but: Demo accounts, since they propose zero risk, do not teach anything regarding mental toughness.

Specialize in One or Two Currency Pairs

This is advice that is often disregarded. Effectiveness and specialization have always gone hand in hand. Broad but superficial knowledge is often not usable. This is a (more or less) universal truth, which concerns daily life, professional life, etc. It also concerns, obviously, Forex Trading. Therefore, as you study and form your technical background, specialize in a few currency pairs and insist on those. There will be time to shift your skills to other assets, although the concept of "reconversion" should be taken with a grain of salt.

Know Yourself

This is clearly advice that concerns the relationship - very complex and varied - between Forex Trading and psychology. A relationship that is never investigated enough, given the predominant role that the psychic sphere plays in trading activity. It's not surprising: trading is a stressful activity, and the only way to resist a stressful activity is to put into play a personality that is not necessarily strong, but adequate. Knowing yourself means knowing your limits. Perhaps it will not be trading that allows you to overcome them, but at least you will be able to recognize those elements and events capable of dangerously stimulating your weak points. Consequently, if possible, you will also be able to avoid them.

Learn to Control Your Emotions

Much easier said than done. You still have to try, if not to control them, at least to limit their effects. Emotions are enemies of the trader, regardless of their sign: euphoria can do more harm than panic. Indeed, it often does, also because euphoria pushes the trader to recklessness, while panic in most cases paralyzes. All traders struggle with their emotions, even the most experienced ones. The difference lies in the effectiveness of this struggle. How to do it? The path is long, but it starts with habit. Once you have experienced a wide range of emotions during your trading activity, you can begin - precisely because they are familiar to you - to tame them. In the meantime, try to develop an approach that is as impassive and ataraxic as possible.

Mentally Prepare Yourself to Experience Very Stressful Moments

There is no doubt that Forex Trading is an almost inexhaustible source of stress. The stress is mainly due to two elements: the unpredictability of the market and the fear of losing money. The market is unpredictable for a simple reason: it is "governed" by human beings (who are unpredictable by nature) and above all by many human beings. It is also and above all the number that generates unpredictability. The fear of losing money always accompanies the trader, also because it is a legitimate fear. You are not investing in a deposit account or even in a bank, but in an activity - precisely - potentially unpredictable.

Mentally Prepare Yourself to Lose

This is a strange piece of advice to give. More than advice, it seems an attempt to put your hands forward, or a profession of... Distrust. Yet, it is extremely important to mentally prepare for loss. Also because loss is simply inevitable. Everyone loses, from the beginner to the expert. The problem, the real decisive element, lies in the "how much." Obviously, beginners lose infinitely more than experts. Therefore, prepare yourself. Mentally, to cushion the blow. Technically, to ensure that the loss does not compromise your path to success.

Don't Copy Other People's Strategies Entirely

This is a mistake that beginners often make, whether due to the spasmodic search for convenience, insecurity (an understandable feeling), or on the contrary, overestimation of their skills. The fact is that people often follow strategies created by others... And they lose. It's not that taking cues from others is wrong. But, precisely, it should be a matter of "taking cues." Also because each strategy only works under certain conditions, only if the trader follows a certain approach, possesses and operates with a certain style. Even differences in capital often make strategies not fully replicable. So, what should you do? Simple (to say): create your personal strategy. Or, at the very least, adapt it to your trading style.

Don't Force Your Trading Style

To adapt someone else's strategy, you need to know your own style, your own way of doing things. When it comes to Forex Trading, it's not so obvious. In any case, and this is advice that goes hand in hand with the previous one, don't force your hand. If a strategy requires you to change your approach (especially regarding risk), change the strategy.

Create a Routine

Routine is a very useful tool and relatively within reach. It applies to all activities that require commitment and concentration: routine makes you more efficient as it allows you to employ - within the limits of the activity you are performing - procedural memory. Moreover, routine reassures, and only traders know how much there is a need for certainty (or a sense of security) during speculative investment activity. Therefore, if you decide to embark on the path of Forex Trading, create your own routine. For example, carve out a fixed number of hours for trading, and a portion of the day (which must always be the same).

Be Simple in Technical Analysis

This is advice that few, at least in the beginning, follow. The reason is almost trivial: there is a widespread perception that simplicity is synonymous with inefficiency, and that complexity is synonymous - on the contrary - with efficiency. In the vast majority of daily actions, this is false. In Forex Trading, at least when you are at the beginning, it is always false. Complicating things will not help you solve problems. On the contrary, it will force you to lose sight of the overall picture, reducing the effectiveness of your analysis. Therefore, do not overuse indicators, oscillators, and analytical techniques. Choose a few, consolidated, effective ones.

Don't Rely Solely on Technical Analysis

Technical analysis is an irreplaceable, essential resource, but certainly not the only one. Yet many, especially at the beginning, show blind faith in the chart and the evidence it is able to express. In this way, however, they lose along the way the other "half" of the analysis, which is the so-called "fundamental" analysis. By fundamental analysis, we mean the study, from a predictive perspective, of what happens in the economic and political environment. There are many events that can influence the market, sometimes suddenly and in a predictable way. Above all, the publication of macroeconomic data. Knowing how to read this incredible amount of data and, if possible, anticipate it is essential to optimize your trading activity.

Consider Your Starting Capital

The aspect of capital is extremely important. Is it necessary to start with a lot of money or can you start with a small capital? From a technical point of view, a few hundred euros are enough to operate in the market. After all, brokers have been opening up to the masses for many years now, and to do so they have drastically lowered minimum deposits. However, it may not be advisable. The reason? Simple: the (potential) gains would be too meager. There is nothing wrong with this, but it could generate a dangerous dynamic, namely the pursuit of profit at all costs. And here we come directly to the next piece of advice.

Don't Abuse Leverage

Especially those who start with a minimal capital and see very low profits (if they see them at all) are tempted to force their hand, to accelerate the path that (should) lead them to success. For this reason, they tend to employ high leverage. Leverage, let's be clear, can be a useful tool. Too bad it's a double-edged sword that can potentially lead to the zeroing of the account. The advice is to think a hundred times before using leverage. In any case, choose low leverage, certainly not capable of tearing your account to pieces if things go wrong.

Consider Commissions and Spreads

Maybe, despite your beginner status, you already manage to grind out profits. Sure, in the beginning, the gains could be small, but the performance looks promising. Only to then discover that a good part of the gains is eroded by the broker's commissions. It's a risk that is not at all far-fetched, on the contrary. The advice, therefore, is to consider the economic conditions before choosing this or that broker. Incidentally, market maker brokers generally do not charge commissions but only spreads. On the other hand, ECN brokers almost always charge commissions but rarely include spreads.