Forex is the trading of currency pairs based on fluctuations in their exchange rates. Becoming a good forex trader is going to take a lot of patience and demanding work. You can’t expect to become a professional forex trader overnight, just by reading about it. There are several techniques that you will have to follow and master before you can start trading like a pro. Here are some tips that will help you with becoming a better trader in forex.
A common mistake that a lot of traders make is to overlook the fundamental analysis that is involved with trading. Keeping in touch with globalization news is one of the best ways that you can go about with your fundamental analysis, as these will affect the direction that the exchange rates move. However, don’t rely on fundamental analysis alone, as this is only used to get a general idea on the trend direction. For the entry points and exits, it is best to determine using a bit of technical analysis. However, if there is a major report that is expected to move the market, it is safer to avoid speculation by placing bets on which way the market will move.
Practice on a demo account
Forex trading is an art, which is going to take a lot of practice to master. The best part is, you don’t have to invest real money to practice trading, since many forex brokers allow you to set up a demo account through which you can trade. When trading on a demo account, you should simulate your capital and lot sizes to what you plan on investing in real money. The only drawback with demo account trading is that it will not simulate the emotions that will be involved when you trade with real money.
Master Technical Analysis
This is going to be your bread and butter when making trades. Technical analysis involves studying historic data in charts, to try to identify the direction of the trend. However, you will need to keep on eye out for major news events such as China foreign policy news as these can make or break a trend, depending on the impact. Using technical analysis, you will be able to develop a system which you can use to make your trades. If you don’t follow a trading system, you can’t expect to make a long-term gain.
These are three tips that will help you with becoming a better forex trader.