Starting to trade forex is an important milestone for any trader and represents the beginning of a new professional path. However, same as with any other business, managing to achieve consistency on a month to month basis with be dependent on each person’s ability to study, make sacrifices, be flexible, and constantly improve trading skills. Considering that the COVID-19 pandemic is expected to create both short-term and long-term currency implications this year, beginners should approach forex trading with a grain of salt and at the same time, they should consider the three tips we want to share.
Tip #1 Start trading live after the strategy is well-designed
A forex trading strategy and the ability to follow it diligently are two of the most important requirements needed to start live trading the forex market. You should have clear rules that determine how you understand the market context, what types of setups do you trade, what entry and exit rules should you rely on, what risk management system do you want to use, and other critical details.
Before live trading, it would be important to test the strategy with a forex simulator or on a demo account. It may seem like a boring process, but it will help you learn how to follow the rules at any point, without deviating from the strategy.
Tip #2 Focus on liquid currency pairs
Volatility in the currency market had come to life in 2020, following a few years of narrow daily ranges, generated by increased central banks’ intervention. Given that the forex market is active again, there no point in taking exaggerated risks with exotic currency pairs. EURUSD, GBPUSD, or AUDUSD are great pairs to trade during the next few months. One should be aware that upcoming currency issues might appear in emerging markets and sticking to liquid currency pairs will provide a safety net during times of uncertainty.
Tip #3 Keep a conservative approach
Although the primary instinct will be to increase the risk, trade more and desperately search for opportunities, the opposite approach will be more appropriate. Beginners don’t have the skills required to generate consistent returns. You are still in the learning stage, even though you’re investing real money. Keep the risk per trade low, be selective with all the trading opportunities and walk away when the sudden market volatility is clouding your judgment. The market will be opened tomorrow, as well, and plenty of other opportunities will show up.