Recommendations for Beginner Forex Traders

These are not just more recommendations for traders that should inspire you. These tips are taken from trading analysis of many new traders in the forex market.

If you are a successful forex trader, it means that you can easily control your mind and actions. This also means that you have perfected your chart reading and market analysis skills. “Reading” the market is not a difficult task that takes several years to master, but there are still some traits that distinguish a successful trader from everyone else.

It is difficult to call trading a mechanical job that can be done automatically. It is worth remembering that the market is a dynamic environment and those who cannot adapt to it will leave it without a single penny. To keep up with the market you need to study a science called price action. Because it is based on human psychology, and our psychology never changes. So we get that the Forex market is the art of reading prices.

Learn the Basics

Yes, it sounds banal, but it is necessary. Most new traders skip basic training and jump straight into trading. This is, of course, a fatal mistake on their part. So if you are a beginner, learn the basics of trading.

Only trading experience will make you rich

If you want to get rich quick through trading, you won't succeed. Don't be so naive. Success in trading largely depends on your experience. As with any activity, the longer you do it, the more effective you become. The path to becoming a professional trader is long, so be prepared to wait between one and three years before you start making a profit. Trading is a long journey, but it's worth it. Trading the financial markets is a career, not a get rich quick scheme.

Don't trust the experts

Experts are a fiction. Every newbie who has a profitable week begins to think that he is an expert. Another more pathetic type of expert is the 30-60 year old guy who claims to be a professional trader but asks you to buy his training courses. These people are most often unsuccessful traders who make money by teaching beginners.

Typically, these self-proclaimed experts seek to:

  • To sell you old information about trading, which is no longer relevant for a long time.
  • Claiming that they are rich people who hardly work. However, at the same time they are trying to sell their courses.
  • Making claims like they turned $1k into $10k in one month of trading or something like that.
  • Trying to prove that they are profitable traders by posting photos of their account made in Photoshop.

Most experts are clueless. Don't trust them.

Always do your analysis

Blindly following others will make you blind. Your goal should be to become a successful trader, not a pigeon chasing others around for a piece of information.

As a trader, you need to choose your trading method and learn how to analyze the market. Your own analysis will help you become a professional trader. This will enable you to remain confident and continually learn from your trading mistakes.

If you decide to blindly follow some self-proclaimed guru, you will not learn anything. How will you make money when your guru stops giving advice or his advice no longer works in the current market conditions? You won't even be able to understand why they worked before and why they don't work now.

The demo account myth

If I wanted to become a professional boxer and started training boxing while playing on my Playstation 4, would it make any sense? It makes the same sense as constantly trading on a demo account in hopes of becoming a successful forex trader.

Demo trading does not work for 2 reasons:

  • Demo accounts give new traders false confidence and force them to learn bad habits.
  • The performance of a demo account is often higher than that of a real account with almost any broker. This includes order execution speed, slippage and a number of other factors.

It is optimal to use a demo account only to learn the basics and test your trading strategy. When it comes to real trading, you should only trade on a live account. These days you can open a $10 cent account, so there's no reason not to trade live. Read about recommended cent brokers in the same article about demo accounts.

If you can't afford to lose $10, then you're better off not trading at all.

Don't focus on losses

This is one of the most important trading tips I have ever used in my own trading. If I had not strictly adhered to this rule, I would not have succeeded.

If you have made three losing trades in a row, stop trading for a while. Take a day off and come back to your schedules with a clear head. Losing periods can be very dangerous, and falling into them can cause you to lose even more. Know how to stop in time.

Don't follow the crowd

Have you probably heard that 95% of new traders fail? The secret is that you need to break away from the crowd and go your own way. This doesn't mean you have to reinvent the wheel and create your own unique trading style. This means that you must rely only on yourself. Gain enough knowledge and experience to become an independent trader. Don't become a follower.

Think about it logically:

  • The vast majority of new traders fail.
  • If I follow the majority, I will become part of the majority.
  • If I'm part of the majority, I'll probably fail along with them.

Become an independent trader. This is the secret of professionalism.

Stick to your trading method

Every trading method has its ups and downs. No trading system, method or style will be 100% profitable all year long. Every year you will have periods when you lose more than usual. During these periods, you should not lose faith in your trading method. Keep working. The problem with most newbies is that they become disillusioned with their trading method after the first bad week.

Don't give up on your trading method when times get tough.

Simplify your trading

There is no reason to complicate your trading. For example, my trading method is extremely simple, but extremely effective. I spend an average of half an hour a day analyzing charts and opening trades.

Try to make your trading as simple as possible. This will allow you:

  • Trading is much more efficient.
  • Trading takes much less time.
  • Accelerate your learning.

Trade one currency pair

The key to becoming a professional trader is to make trading as easy as possible.

One of the easiest ways to simplify your trading is to trade only one currency pair. This will help you concentrate all your efforts on studying this pair and study its movement in detail.

If you try to trade 5 pairs at the same time, you will have to learn the unique characteristics of all pairs.

Each currency pair is unique because it:

  • Reacts differently to news.
  • Moves at different speeds.
  • It has different volatility on different days.
  • The rules for transferring a position and trailing stop are different for each currency pair.

If you are a beginner, trading multiple pairs will add a lot more stress and will only slow down your learning process. So start with one pair. Once you learn how to make a profit, you can gradually add new currency pairs.

Trade only on one time frame

Choosing one time frame simplifies everything as much as possible and provides the following advantages:

  1. You will be focused on learning just one time frame, eliminating the confusion that comes with learning multiple time frames.
  2. You will focus on studying one type of graph, which will improve the efficiency of your analysis.
  3. You will be able to remain more objective in your forecasts. Watching too many time frames will give you conflicting signals.

Remember that success in trading comes down to simplicity. If you only have one time frame and only one currency pair, this means that you are looking at one chart. If you are a beginner, you should not constantly switch between timeframes. Stick to one schedule until you become consistently profitable.

Clean up your charts

Most beginners collect many indicators on their charts. They think that since indicators help in trading, it is obvious that the more there are, the better it will be. But that's not true.

Each additional indicator:

  1. Clutters your schedule and makes it difficult to understand.
  2. You have to analyze a lot more information before opening a trade.
  3. Increases the likelihood of receiving conflicting signals.

Indicators are not necessary. I personally trade without any indicators at all and use support and resistance levels in combination with price action. I'm not saying that you need to get rid of all indicators. Limit their number to a maximum of two indicators on the chart.

Prepare your mind for the “war” with Forex

Preparing your mind to battle the market is a necessary step for those who truly want to become successful. The battle will be between you and your emotional impulses. You need to enter the market with a clear head to avoid overanalyzing news reports and not being overwhelmed by the signals from your trading system.

It is very easy to prepare for trading by accepting Forex for what it is, as well as realizing the harsh reality of trading on it. If you only have $1,000 on your balance, then there is no point in thinking about leaving your main job; you will not be able to earn enough to feed yourself. You need to concentrate on the overall performance of your trading system and money management, after which the money will come. Beginners do things differently: at first they concentrate on money and their trading, and after losing a few deposits, they start learning about money management.

Those who trade professionally never worry about whether a trade will be profitable or unprofitable, because they know that they have everything under control, and losing is just part of the game. Another reason for their calmness is the fact that they do not put pressure on themselves with specific monetary goals. Trading is a profession in which you will never know for sure how much you will earn next month.

When you open an order with the hope of making as much money as possible, you immediately begin to attract unnecessary problems to yourself: overanalysis, strong pressure, an unbalanced emotional state, and more. Every time you do this, you will lose money because your thoughts have lost their rationality and you are controlled by greed.

Identify your strengths

When it comes to forex trading, you must manipulate your strengths. Most trading literature focuses on removing your weaknesses rather than developing your strengths.

Most likely, this happens because when you reduce your weaknesses, only your strengths remain, but this is not always the case. This time, let's focus on improving your strengths.

But first, let's figure out what strengths are and how to identify them. In simple terms, strengths are what you are good at. But every strength has its own weakness, and it must be removed

So how can we determine the strengths of our trading? Here are some steps that may help you.

Review your trading journal

If you have read my articles on psychology carefully enough, then you should have noticed how often I mention the trading journal, namely, filling it out correctly. Therefore, use it to your advantage, review those transactions in which you performed well.

Select the top 10 best deals and answer these questions:

  • What currency pairs were the transactions made on?
  • Did you stick to your trading plan?
  • What were you based on when deciding to enter a trade?
  • How long were you in the deal?

Try to identify the factors that influenced the positive outcome of the open position.

Write down your strengths regarding trading

Of course, this may be a boring task, but it is necessary to complete it. It is not necessary to write out a lot, five will be enough. Here are examples: creativity, curiosity, openness, thirst for knowledge, wisdom, patience, survival, love, kindness, intelligence, modernity, humor, optimism, spirituality, thirst for beauty.

Done? Now try to choose a task for each quality that will suit it. For example: I like to learn, which means I should direct this quality to learning new strategies, indicators, trading systems, and so on.

Ask other people

Ask your work colleagues, family, classmates, and classmates about the qualities that they consider strong in you and that help improve your trading results.

Then, check their list with yours. You'll likely be surprised by what they think of you.

Now you know how to identify and properly use your strengths.

Become more confident in your trading

I would like to say that Forex trading is one of the most difficult activities that a person can choose. You will be required to work in environments that lack precision. This means that traders rely only on the probability of an event to become successful.

One day you can earn several thousand dollars, and the next you will lose half of your deposit.

Due to such trading conditions, you need to become more confident in yourself and your trading system, since every unsuccessful trade will affect your psychology. Confidence will help you focus on achieving better results and stay away from emotions such as disappointment and fear.

But since it is impossible to avoid losing trades in trading, I advise you to familiarize yourself with three ways to increase your confidence.

Focus on the trading process

Almost all the traders I know chose trading because of the opportunity to make instant money. But as I've said in previous posts, being too focused on profits can significantly undermine your trading.

It is important to remember that the market is unpredictable. The fact is that there can be no 100% certainty in determining the next direction of the market. Instead of focusing on profits, focus on sticking to your trading plan.

Forget that you are trading for money, trade for the process, look at the accuracy of the entry rules for your trading system.

Therefore, train your discipline, it will significantly increase your confidence in trading. You may not see results right away, but in the long run your deposit will thank you.

Practice, practice and don't stop!

Do you know why boxer Manny Pacquaio spends weeks training for a fight that lasts no more than 36 minutes? This is because thorough preparation increases your confidence through skill.

As a trader, you will never know what is influencing the market sentiment at the moment. This means that you must practice so that you are prepared for any possible situation. You need to practice every day until you are confident that you are prepared for any possible scenario in the market.

Look at things positively

Ask yourself: “How many positive people have you met in your life?” I'm sure it's not enough. Successful and confident people always have a positive vision of events.

So instead of being sad and upset, find something good in the mistake you made. For example: we received a loss, analyzed this transaction, identified the mistake made, and were glad that we would not repeat it again.

Remember that losing trades will happen, no matter how great of a professional you are. But if you follow the rules of entering a trade and the rules of money management, then the law of averaging will work for you, and you will come out on top.

Forget about excuses

I don't have time to trade

A common misconception about Forex is that it requires spending a lot of time in front of your computer monitor. Yes, some traders like this style of trading, but it is not the only way to trade.

You should know that there are different styles of trading, and if you don't have time to spend time in front of currency pair charts, then you can choose position trading or swing trading. These styles only require 1-2 hours of free time, and we are confident that you can find them.

I don't have enough money

It should be noted that this is a very valid reason. She is respectful but unapologetic. Money is a storage medium, and while you are saving it, you can open a demo account. It won't take you a single hour, or even a ruble.

If you want to start trading with real money, then you will only need $10, you must agree that this is a very small amount. And trading with real money will make you feel all the psychological impact of the market on you.

The risk is too great

In every business there is risk, but with enough effort, it is compensated by knowledge. Forex is as risky as any other investment.

Imagine that this is your small business, and any business has its own risks. The key to profitability lies in your skills and your control over your emotions. If you are a complete beginner, then you can start by studying the “money management” section, in particular “setting stop-loss levels”.

Risk is present in everything, even in driving a car. Accept it and learn to manage it.

Forex trading is a scam

Currency trading is not a scam, but there are unscrupulous brokers who enjoy the trust of people trying to make money on Forex.

Before choosing a broker, check its availability in the CFTC or NFA databases. Or just ask your trader friend which broker he works with. You should also avoid purchasing trading systems, strategies, products that guarantee you 100% earnings.

In order to learn how to avoid rubbish and scammers, it is enough to educate yourself correctly and create your own trading system.

Trading currencies, it's too difficult

This may be the dumbest excuse you can make.

The Internet has made the entire trading process so easy that a child of average intelligence could master trading in a few days. Just teach your brain to make the right conclusions and spend more time studying literature rather than communicating with your friends on VKontakte.

Trade according to the “set it and forget it” principle

Why does this work? This works because one important factor affecting profitability is excluded, namely the emotional and psychological state.

Do less, get more! Yes, yes, this is one of those slogans that our mentality cannot accept. How can you work less and still get more? It’s easy, if you apply the 80/20 rule to trading, then it will become clear that we earn 80% of all money in 20% of transactions.

What are the advantages of setting it and forgetting it?

There are a huge number of advantages, no emotional stress, more time to do what you love (although for some, Forex became this business), more profitable trades, stress is almost eliminated, sleep as much as you want, the main thing is to wake up when a new candle opens.

The whole irony of Forex trading is that the less time you spend next to him, the more he loves you, and therefore rewards you with good profits. There is no point in analyzing a huge amount of different data and creating a super accurate strategy. A lot of analysis leads to over-analysis, and precise strategies have to be constantly adjusted as the market is volatile.

The whole point of Set and Forget is that you open your order, set your stop loss and take profit, and wait for the market to close your trade at your stop or profit. If you are comfortable with money management, then you will definitely get the profit you deserve.

Create your avatar as a professional forex trader

All people are different, this truth is known to almost everyone. Therefore, each person has his own set of certain characteristics, moral standards and strong views. If we take into account the fact that trading is largely a psychological game, then an incorrectly chosen trading approach can cause internal contradiction, which will never have a positive effect on your deposit.

In order to avoid such internal conflicts, you will need to create your own avatar of the kind of trader you would like to become, or who is closest to you in spirit.

Where to start creating your own professional?

One thing to understand is that the person you portray will be your main source of inspiration, so try to describe everything in detail, especially those aspects related to trading.

Initially, write down how you imagine yourself in 5 years. It might look something like this.

Example No. 1. I go to the terminal only at 23:45 to look for a signal according to the plan that I made on Sunday, and occasionally I can look at my trade at lunch to confirm that everything is going as it should. The rest of the time I spend doing my favorite activities (list them), or just hanging out with my family and friends. I devote Sunday afternoon to analyzing my mistakes and improving my weak points. Typically, I study my trading journal and later do a historical market analysis using F12. My main emphasis is on those moments where I open transactions that are not entirely well thought out, or simply make stupid mistakes. I mark these places on the chart and write down what needs to be corrected. After that, I sketch out a rough trading plan for each pair for the coming week and then finish my preparation.

In open transactions, I behave patiently, I try to forget about them for the whole day, since there is no point in worrying. I am fully aware that I cannot influence the market in any way with my experiences, and therefore I always try to open transactions only based on the best signals, which I will not regret later.

This could be approximately how you see yourself in the future. It can be completely different if you have a different picture in your head. Suddenly you are one of those who wants to feel the pulse of the market and trade on lower time frames. Then your ideal avatar might look like this.

Example No. 2. I wake up at 7:30 in the morning, exercise, take a shower, and have breakfast. After that, I go to my workstation at 9:00, which consists of three monitors, and begin to note for myself the important levels for today. Having done this work, I go through the economic calendar and highlight for myself those events that could negatively affect my trading. At 12:30 I take a break of 1.5 hours, and after that I start trading again. At 17:00 I close my trades and go to analyze my mistakes. At 18:00 I am completely free.

I don't trade every day, so I only trade Monday, Wednesday and Friday. I try to take such breaks so as not to upset my psychological balance, which can provoke me to win back unprofitable positions.

So we have two examples of what your potential avatar of a professional trader could be. There can be a huge number of variations, since we are all different. You should definitely make sure that this really suits you, since many can simply copy the picture that is often shown to us in films. There is no point in writing that you are trading on the M5 timeframe when you hesitate for a long time before opening a position or you are a quick-tempered person. There is no need to convince yourself that you are trading on the daily time frame if you are constantly drawn to the market, and the metatrader 4 application on your mobile is listed as one of the frequently used ones. Try to write everything exactly as it really is. Perhaps someone is now thinking – What the hell am I doing on a Price Action blog if I want to write robots or trade using indicators?

After you have written everything, read it again and make sure that everything you wrote is true, as this will be useful to you in the next part of this article.

How to use a trader avatar correctly?

There is nothing complicated about this. This picture is the thread that will lead you through the dense forest until you reach your goal. Every day you should look at your avatar, and then compare it with what exactly you did today. For example, in your “essay” it is written that you are a patient trader and do not get into the market out of nothing to do. But in reality, today you have managed to emotionally exhaust yourself with your open position, since you were constantly monitoring it from all possible devices in order to eventually close it exactly before the moment when the price decided to go in your direction.

When you notice a problem like this, you simply write it down and read it every time you are about to deviate from the chosen path. You can write the following: I had already opened a position based on a good signal, I was nervous, I followed it, but this did not help me at all, but only worsened the result, because the market moved in my direction exactly at the moment when I, with my irrational thinking, came to the conclusion that closing a position. In such descriptions, do not be afraid of self-irony, this will only enhance the effect of remembering the error.

In general, you will need to do this kind of action until you really become what you once wrote about.

Learn from your mistakes

Of course, everything I wrote most likely passed you by, and you will continue to trade in your own style. But what happened in those moments when you made a losing trade and lost money. Have you identified the reason for your failure?

In order to overcome all these emotional barriers, you must be mentally prepared. And this is not just for one day, you have to be prepared every time you are about to make a deal. Try to create some kind of motivator for yourself that will force you to remain disciplined and not allow emotions when trading. Typically, such a motivator can be past mistakes that led to the loss of a significant part of the funds or the entire deposit.

The next tool that can help you achieve good results is a trading journal. Record your trading results, keep statistics of your account, monitor its improvement.

Don't forget that Forex is not a regular game. This is an art that must be mastered to achieve financial independence.