After learning the basics of foreign exchange, beginners should consider the following tips as they prepare to enter the market:
Strategically Determine Lot Size and Leverage
Reference your risk management policy and total capital to determine the size of your lots and how much leverage you should take on each trade. There are plenty of free online calculators to help with this process.
Never inflate an exchange’s magnitude unless it is strategically supported by your system.
Always Set a Stop Loss
When getting started, you need to put a stop loss on all of your trades. This helps protect your pocketbook, as a market order will trigger if the price reaches a certain point below entry.
Trading without a stop loss can cost you, especially if you are a novice trader without much experience.
Don’t Trade With Emotion
Only enter a trade in Forex if you recognize certain patterns/indicators that are backed by your system. Traders sometimes mistakenly keep entering the market in unproven circumstances as a reaction to recent success, or as an attempt to make up for intraday losses.
Trading with emotion alone is one of the easiest ways to lose money.
Use an Economic Calendar.
Make sure you are aware of scheduled events and announcements, so you won’t get blindsided in the currency market. Always keep track of such occasions with an economic calendar.
If you’re just getting started in Forex, you may want to avoid trading on a big international news day, such as an election. The market can be much more volatile, and therefore harder for an inexperienced trader to manage.
Take all these tips into consideration as you begin trading. With enough learning and dedication, you should become successful in the foreign exchange market.