Beginners to Forex Trading Need Practice
Beginners to Forex Trading Need Practice, Patience, and a Lot of Nerve
Guest post be Sara Mackey
If you are young and have a few bucks under your belt that you are looking to invest, it is difficult not to notice the preponderance of ads and marketing claims touting the wonders of trading in the world of foreign exchange, or “forex” for short. The popularity of this medium has grown dramatically in recent years due to the flexibility and sophistication of trading software and the opportunity to make large gains in an instant. Make no mistake about it, however, you can also lose a bundle in the bat of an eye if you are not prepared for the high-stress nature of this genre.
Currency trading is definitely a high-risk activity. Disclaimers appear everywhere, but newcomers blithely ignore them in hopes of winning big. Where there is high risk, a wise investor understands that specialized training is a must have. As with any form of investing, the factors for success are the same in forex – knowledge, experience, and emotional control. The importance of each of these prerequisites is heightened since pricing behavior with currencies can fluctuate wildly. It takes a deft hand and nerves of steel to weather these chaotic conditions, traits obtained only after many hours devoted to practice and preparation.
How does one go about getting prepared for the battle? Knowledge and experience are the first objectives. Read everything you can find on the topic. There are also ample tutorials on the web that can educate you as to the nuances of this field. The goal is familiarity before you enroll in a formal class where you can seek out a “mentor” to guide your progress. There is a lot to learn and be prepared to continue your learning after the formal class work ends. As for invaluable experience, most every forex broker offers a free “demo” trading system that uses real time quotes and “virtual” cash to mimic a real trading environment. Veterans devote months to this exercise to fine tune their trading strategies, steel their nerves, and gain the consistency necessary for the “Big Time”.
Before you ever put a dime of real capital on the line, however, you need to determine if you are truly cut out to be a trader. Not everyone is. Day trading can be extremely hectic and nerve wracking. Beginners usually have more luck with longer timeframes than just one day. “Swing Trading” is the term for holding a position for more than a day. It can be less intense, but it will still test your emotions. During your practice sessions, you will find out if your gut can handle this new form of anxiety. Forex trading can be very exciting when the market moves with you and very frustrating when it does not. Losing is part of the game. You must learn to accept and minimize losses, until you can ride a “winner” for all it is worth.
No single trading method works all of the time. The market’s “personality” changes daily. It is your mission to assess the nature of each day’s trading action, and then to adjust to what the conditions demand. Automated traders are known to try a half dozen methods on a given day, and then, after seeing what works on that day, to double down on the preferred strategy and shut down the rest. You will not have that luxury, so caution is your best friend, along with prudent risk and money management principles.
The world of foreign exchange can be very appealing and addictive, especially to newcomers to the fold. Patience, practice, and steady nerves are paramount.