5 Tips for Beginner Forex Traders

There is always a start to anything. In forex trading, the first experience usually marks the trader forever.

It is said that you are hooked on trading after the first successful trades.

But the life of a beginner forex trader would be easier if they knew these five tips in advance. This is why there are you should do your research and find some of the best forex trading platforms in South Africa that offer everything that a trader would need, from opening an account for the first time to successfully trading.

Know When the Markets Will Move

The forex market is constantly moving. However, sometimes it moves faster than other times.

For example, imagine that there is no important economic news on a Friday. Nevertheless, the economic calendar tells you that the Federal Reserve of the United States is set to announce its monetary policy decision next Wednesday.

Effectively, it means that the overall market is unlikely to move until Wednesday, as traders prefer to wait for the Fed before taking a position in the market. Therefore, it makes no sense to trade in anticipation of a big market move. Instead, look for short-term market moves, scalping on different pairs, and ranges to hold.

Use Pending Orders

Plan your trade and trade your plan – a great saying in the forex market. By using pending orders, you do just that.

A pending order shows discipline and the existence of a plan. After all, you’ll want to get in or out of the market at a certain level – only if the market reaches that point.

Pending orders are part of a sound money management system, and they always help. The problem is that traders usually have an issue waiting for an order to be filled.

Accept Losses as Part of the Game

No one can be right 100% of the time. That is particularly true when trading financial markets.

What is more important here is to be more often right than wrong. Also, to have winners much bigger than losers.

Nevertheless, losses are part of the trading game, and the sooner a trader embraces them, the better.

Use Appropriate Risk-Reward Ratios

A trading account should grow over time. But growth is never linear.

Instead, it has ups and downs, reflecting the struggles in a trader’s life. As part of a successful trading strategy, risk management is vital.

Risk management without risk-reward ratios makes no sense. An appropriate risk-reward ratio in the forex market is 1:2 or 1:3. The bigger, the better.

It means that for every unit of risk, the trader expects to make twice or three times as much profit. Put it simply, for $1 risked, a risk-reward ratio of 1:2 implies $2 in profit.

This way, the trader integrates losses into the trading strategy, and when a winning trade arises, it more than compensates for a losing one.

Don’t Fight the Market – Embrace the Price Action

The markets may stay irrational more than a trader may stay solvent. Be humble, respect the price action, and don’t overtrade when the market “runs” from you.