This IPitch guest article was kindly supplied by Cathy Habas.
Forex trading can be an excellent supplementary source of income that can fund your startup or business venture. But you won’t get rich overnight on the forex market. It takes planning, time and dedication, just like any other area of business. Still, there’s no better time to start than the present.
In the simplest of terms, you have the potential to either make money or lose money with forex trading. The more experienced and disciplined you are as a trader, the more likely you will make money and avoid devastating losses. If you are a trading beginner, consider these tips to help you forge ahead!
1. Set goals
Do not trade without some kind of plan. Willy-nilly trading is more likely to result in frustration and failure because you do not understand what you are doing and why you are doing it.
The “why” is just as important as the “how.” Set long- and short-term goals. Why are you ultimately trading on the forex market? Is it to earn enough money to fund your startup? To expand your business? Are you creating a retirement fund from the money you make trading? Do you want to get out of business entirely and make all of your money via the forex market?
Once you know why you are trading, start breaking down the process into steps. How much time will you spend each day trading? What do you want to learn about in order to improve your strategy? Being clear in your goals gives you the fortitude to persevere when you encounter setbacks while trading.
2. Develop a timeline for each goal
In order to truly make the most of your trading goals and to make steady progress, you need to set a timeline for each goal. Be realistic in your timelines so that you have enough time to take action, but also be careful about dragging timelines out too long.
For example, if you give yourself an entire year to sign up for a strategy course like Learn to Trade, you’ll easily lose sight of the goal. Pick a deadline for when you will research the best courses. Pick another date for when you will sign up for a course. From there, plan out your schedule to help you complete the course as swiftly and thoroughly as possible.
3. Make small deposits
Carefully manage your risks by only making small deposits as you set up your trading presence. Expand your ability to make larger gains on the market not by making larger deposits, but by leveraging the money already invested in trading.
If your account proves to be successful and is making profits, consider making an additional deposit. But in the beginning, it will simply be too soon to tell whether an account will grow, stagnate or fail altogether. Do not give into the temptation to make quick profits by simply throwing large amounts of money into trades. This is a very poor strategy indeed.
4. Zero in on one currency pair
To begin with, focus on a single currency pair and immerse yourself in the study of that market, its history, its projections and its key players. The most widely traded currency pairs are recommended for beginners, versus the more obscure currencies.
While it may not seem at first like there is much to learn about each different currency, this is a dangerous fallacy. Trust the advice of advanced traders, and don’t spread your focus too thin. Become successful while trading in one currency pair before you expand to additional pairs.
5. Keep your emotions in check
It is easy to feel excited or frustrated based on the day’s gains or losses. But try to keep an objective, fact-based approach to your trades. Desperate attempts to earn large amounts of money after losing large amounts of money are a fool’s errand.
It’s also all too easy to let forex trading overtake your thoughts. If you spend most of the day wondering about market performance, or you can’t be productive at your day job because you keep getting online to check your trades, you should work on detaching yourself from the process. Don’t become emotionally invested. Set aside an hour each day to focus on your forex trades. Spending all day immersed in forex trading is not a guaranteed way to get rich.
Work smarter, not harder, in order to make the most of your forex trades.
6. Learn from mistakes as well as successes
Finally, expect to make plenty of mistakes as you learn the ropes of forex trading. It’s only natural to lose money. Even advanced traders lose money now and then when the market fluctuates. Study your losses to see if there is a pattern that you are missing, and maybe you can avoid a similar loss in the future.
At the same time, study your successes and keep them top of mind in order to motivate you to continue your efforts. Over time, your successes will outnumber your failures, and soon you won’t feel like a forex beginner any more.