Would you like to discover how billions of dollars are traded every day in the world with the forex trading market? Then it is not too late to enter the world of forex trading.
Although it may seem like a difficult and complex system from the outside, trading currencies with forex is actually a system that depends entirely on strategy and analysis.
In its essence, forex is a worldwide marketplace in which currencies fluctuate inexorably as economic and geopolitical conditions occur. Forex traders, like any market trader, seek to exploit these fluctuations by buying a currency that they believe will appreciate more than a currency that they believe will decline.
The idea is to swap the declining for the strengthening and save the difference. Analyzing market volatility and creating smart strategies is helping millions of traders today make money in minutes.
It may sound simple, but don't let that fool you. Forex is actually a market with a complex system and progresses within the framework of strategies. The largest market in the world with over $5 trillion in traded volume daily, FX can be a whirlwind of complexity.
Be not frightened though: all markets were once foreign worlds. By mastering some basic fundamentals of currencies’ operations, anyone can get their forex feet on the ground.
So whether you are a new trader or just looking to get a grasp of the forex hype, this forex beginners guide will cover what’s fueling currencies and how you can be on your way in the FX arena with BlueSuisse at your side.
How to Analyze the Forex Trading Market?
In its simplest explanation, forex trading is the process of exchanging one currency for another. For example, exchanging with EUR/USD is among the most preferred trading.
You can make a profit when converting your assets or investments you buy in dollars into euros, or vice versa. All exchange rates are expressed in relation to the US dollar because this is the world reserve currency.
The value of a currency is subject to supply and demand and economic variables such as interest rates, inflation, GDP growth and so on. And the thing about forex is that it’s an all-around, global exchange so you can buy and sell when it suits you – from the night owls who frequent Asian night markets to the early birds who get London openings.
Forex can offer even more leverage as well, sometimes as high as 50:1. This allows you to own large positions up to $50,000 in size with only $1,000 in your account. Leverage boosts both profits and losses, so managing risk is essential for new players.
Popular Forex Trading Strategies That New Traders Should Know
Keeping things simple is your best bet when you first begin. When you start forex trading, it takes time to discover the strategies that suit you best.
Therefore, it is very important to do a lot of research and get information about the currencies and their conditions in the market. As your analysis skills improve, your probability of making a profit while doing forex exchanges increases.
The following are some basic and efficient trading tips, many of which are helpful for a beginner forex trader:
- Trend Trading is about determining which way a currency pair is trending and trading it. Trend is determined by moving averages, etc.
- Range Trading targets highs and lows on a sideways moving pair. Traders seek to make short-term profits from movement within a price range.
- Counter-Trend Strategies look for temporary reversals against the main trend, hoping to capture relatively small moves in the opposite direction before prices resume their prior path.
- Fundamental Analysis examines the impact of political or economic factors on currencies in the long run. Investors read about interest rates, GDP, inflation and so on.
- News Trading involves reacting quickly to scheduled announcements which frequently trigger volatile exchange prices. The trick is predicting how markets will react to the news.
All of these methods are most successful in tandem with prudent risk management (more on this below). The lesson here is to begin simple as you're just learning forex markets.
Tips on How to Do Risk Management in Forex Trading
Now that we have established some simple tactics, the next big issue is managing risk in forex, which is the Achilles heel of most aspiring traders. Leverage allows you to hold big positions with little capital but losses multiply without discipline.
Investing in new currencies is as important as monitoring the status of existing currencies in terms of risk management. Because the assets you store in a currency that is declining in value can turn into profit if its value increases.
Important risk-reducing tools include:
- Stop Losses - Create automatic exits to limit downside on failed trades. Stops save capital, not ride losses.
- Position Size - Reduce risk on each trade to 1-2% of your account. This will ensure you never make one mistake that destroys your equity.
- Risk-Reward Ratio - Strive for targets at least twice the size of stops. This adds to your statistical advantage in many trades.
- Diversification - Do not put all your risk in one or two tools. Distribute it in multiple pairs of currencies.
- Margin Levels - Keep an eye on margin calls if negative swings drive up your leverage. Close positions proactively.
- Demo Test - Test your forex trading strategies in demo accounts before going live to ensure that they are viable in the real environment.
Writing down each forex trade and keep checking in to identify weak points and hone your system. Risk management is half the battle when it comes to forex. At BlueSuisse, you can use these resources right from the beginning and be a step ahead of the curve.
Which Time is the Best to Trade Forex? Key Tools
The traditional market only allows trading 5 days a week and within certain hours. But the forex trading market is active 24/7. In this way, you can make much more dynamic and advantageous investments at any time of the day. The 24-hour nature of forex means that you can trade anywhere in the world anytime.
But for beginners traders, two sessions provide the greatest potential:
- London (8 AM - 12 PM EST) - European and British banks open their doors and volatility kicks off with big economic data and regional news.
- New York (1 PM - 5 PM EST) - Market action from US traders blitzes liquidity. There are sharp ups and downs around strong US data.
During these sessions, you will find the largest volume and tightest spreads for majors EUR/USD, GBP/USD, USD/JPY. Keep the Asian hours low, until you get some experience.
Position trading overnight also works but requires larger lots as the volatility is less. You can start out by trading in London and New York in order to have the most trades every week at BlueSuisse.
The Most Common Mistakes Beginners Make in Forex Trading
There are a few mistakes that amateur traders make that could seriously destroy their account if they go ignored.
Here are the top five most common traps to avoid:
- Over-Trading - Short-termism breeds loss. Positions should remain open long enough for your plan to take shape.
- Too Much Leverage - High gearing means a few losing trades wipe you out. Start small and only risk 1-2% per trade.
- Lack of Stop Losses - All trades should be triggered if they turn against you. Manage risk on every position.
- Following Tips Blindly - Build your system from experience, not from unreliable sources.
- Trading Emotionally - Act objectively. Don’t trade when you are tired, frustrated and losing.
- Averaging Down - Reduce losses rather than making bad trades. Let winners run their course.
- Ignoring Backtests - Check past results before you put real money at stake. Simulation protects you.
- Focusing on Profits - Have a solid risk plan and follow it, even if it means missing some wins. Discipline lasts.
Catching mistakes made in forex early is crucial. BlueSuisse tools, training and advisory steer traders away from these traps.
How to Build Confidence in Forex Trading?
No one is a born trader. Confidence comes over time through trial and error and discipline over a long period of market cycles. Here are some self-confidence tricks to try:
- Learn the basics behind currency pairs and how economic calendars influence price action. Knowledge is empowering.
- Keep a trading journal of all your gains and losses. Keep tips in your journal.
- Test out systems using a demo account and don’t put money on the line. Develop strategies using live market modeling.
- Set short-term goals. Learn to crawl before taking big steps.
- Start with micro lots and tiny position sizes. Little victories encourage uncompromising confidence.
- Celebrate wins, big or small. Positive reinforcement motivates progress.
- Don’t judge too harshly when you make a mistake. Learn from your mistakes instead of dwelling on them.
- Trust your laws and turn a blind eye to feelings. Repeat your routine over wins and losses.
- Accept volatility as normal. Stay objective through fluctuations.
- Do not compare strategies with another trader. Everyone's strategy should be unique, comparing with other accounts and currencies can bring you negative results in the long run.
Advantageous forex trading is achieved through smart investment strategies designed specifically for each user. With BlueSuisse, you can follow the forex trading market from anywhere in the world and create your personalized strategy to exchange currencies that best suit you.
The secret to a successful forex trading career is learning how to handle risk, staying true to the methods you’ve been familiar with, getting experience on demo accounts, trading the main sessions, and learning new techniques and knowledge at BlueSuisse.
Developing confidence may take time, but these habits will carry you well in your trading career. Confidence emerges gradually. Study and practice carefully at BlueSuisse to learn it in a long-term, safe manner.