How to make money on Forex from scratch
15 Tips for Novice Traders
Those who are just starting to trade in forex often look for tips on how to make money in this market from scratch. In fact, it is enough to simply turn trading into a source of constant income - the main thing is to follow certain principles of money management. Professional entrepreneurs have deduced several rules that a novice speculator simply must learn by heart. W This allow you to start earning on the Forex market from scratch today!
1. Choose a good broker
Success in the market is at least 50% dependent on the broker and the trading conditions he offers. It is important to choose a dealer from among trusted companies that have been operating on the market for more than a year and have the necessary licenses (for example, Alpari or Forex Club ). Ideally, they should be regulated by international authoritative organizations.
A conscientious dealer will not allow slippage and requotes, artificially limit the time of the transaction, set an increased stop level, and also prevent the withdrawal of money. In a word, a good operator will be able to implement any strategy - from scalping to interday trading.
However, some well-respected companies rely only on wealthy and professional clients, offering a high entry threshold, trading at least 1 lot and fairly large stop levels. Other brokers attract beginners by offering loyal trading conditions and a developed training system.
It is also necessary to pay attention to the trading platform. The most popular options are,
- MetaTrader 4
- MetaTrader 5
- Rumus
- VertexFX
- Protrader
and some others. Most brokers offer modified versions of MetaTrader. There are online platforms and mobile applications, which are very convenient, as they expand the possibilities of work.
2. Learn and learn
Many novice traders, having attended 1-2 courses and read 2-3 motivational books, immediately rush to make money on Forex, encouraged by successes and examples. In fact, they are in for disappointment and a quick drain of capital, since they do not have the skills and abilities that professional traders and expert economists have.
In order to successfully trade forex, you need to learn a lot of materials and never stop. New methods of earning money appear regularly, they need to be studied.
New strategies and tactics must first be tested on a demo account ( choose a broker ). There is no need to rush: the market will not leave you anywhere, but the experience will remain. Experts note that it is worth switching to a real account if you manage to double your deposit on a demo account (at least $ 1,000) in 3-4 months. In addition, working on a demo will allow you to perfectly study all the trading conditions of the chosen platform and detect possible pitfalls.
3. Stay up to date with the news
Technical analysis is not the cornerstone of forex. For long-term trading, fundamental analysis is more suitable - news, forecasts, intentions of major market players, etc. Even small data can significantly change market conditions, and traders will have to adjust to new conditions. Trading on stocks and CFDs in general is carried out mainly on the news. It is they who set the trend, which then "fits" those analysis.
To keep abreast of the latest events, you can subscribe to the relevant newsletter or simply monitor the investment calendar.
4. Accelerate your deposit with bonus funds
Most traders start with a small deposit and use special strategies to accelerate it (or connect automatic assistants ). At this point, trading is aggressive, and there is a chance of "draining" capital is equivalent to a chance to increase the account many times over.
To mitigate the risk, experts advise organizing overclocking using bonus funds. Some companies, such as Teletrade or Forex Club, offer up to 100% bonuses to the account. This money cannot be withdrawn, however, the profit earned with their help remains on the trader's deposit. It can be used for further work or withdrawn to your account.
5. 10% per month - excellent result
This recommendation does not apply to the initial stage, when the deposit is accelerated by aggressive methods. The advice is addressed to traders who have $1,000 or more in their account. You should not risk such a large amount for nothing, choose more conservative strategies and do not forget about money management.
Experienced traders note that 10% of the deposit per month is an excellent result even for a professional market participant. This allows you to double the account in just 9 months (assuming that income is capitalized). Normally, if there are 7 profitable and 3 losing trades for 10 trades.
The pursuit of excessive profits can play a cruel joke, forcing you to take risks and waste money.
6. Try several trading systems and form your own
Each trading strategy is unique and in most cases works only with a certain currency pair, on a certain timeframe and in a certain direction of the market (for example, during the Asian session, after the start of the London session, in a flat, if there is a trend, etc.). Therefore, a good trader is fluent in 3-4 different trading systems and uses them depending on the market situation. Remember that universal strategies do not give such an effect as specific ones, "sharpened" for certain conditions.
Ideally, after 1-2 years of using other people's trading schemes, a trader develops his own system of strategies. In this case, you can talk about his professionalism.
But this does not mean that such a trader has found the desired "Grail" - the market is changing, and yesterday's methods may no longer work today. Don't forget to learn and test new strategies on a demo account. We invite you to familiarize yourself with some of them.
7. Don't use martingale and averaging if you don't understand how it works
Of course, you have heard that aggressive martingale strategies, averaging, pyramiding, “order grid”, locking and other ways to double or triple the deposit in one trading day. But if you are starting Forex trading from scratch, it is better not to use these schemes on a real account, but to test them on a demo one.
Such strategies involve great risk and require the trader to have extensive experience not only directly in trading, but also in money management, as well as quick response and the ability to make the right decisions. In addition, such an entrepreneur must be psychologically prepared to close a losing position in order to avoid further losses, and this requires considerable determination.
8. Stick to the rules of risk management
Remember the basic rules of money management:
Do not risk more than 2% of the capital in one transaction;
Do not open orders for a total amount of more than 10% of the capital;
Close positions before the release of important news4
Do not change the trading strategy in the course of work.
It can be difficult when you see that most of the funds are passive on the account. It looks like you need to use them to make them work. However, do not forget that no one is immune from losses, and many open trades can bring a large loss in aggregate. It is better to think carefully and open one trade than many in the hope of winning.
9. Don't use borrowed funds
This should become an axiom. You should not take a loan or use a credit card - if you lose money on forex, you will have to pay back from your hard-earned money. It is better to accumulate the required amount on your own, but in the meantime, save up - work on a demo account and make virtual victories. Please note that this is not a waste of time - you gain experience, and some brokers, such as Alpari and Teletrade, regularly hold contests between demo account traders with real prizes.
10. Don't get emotional
The two main emotions that drive forex trading are fear and greed. People are afraid of losing, and therefore hold unprofitable positions until they lose all their capital. Others sit out the trade for too long, being greedy and hoping for a bigger win, as a result they take not so much money or even go to zero.
In addition, you need to control your emotions in the following cases:
With a series of unsuccessful transactions. Do not change your trading strategies and do not rush between different ways - this will not help you, but will lead to even biggest losses. Better calmly figure out what's what, take a break, return to trading in a few days.
With a series of successful transactions. It is important not to lose your head and not enter the market with courage: it is easy to make mistakes.
If you are caught up in the excitement. Forex is not a casino, but a job, watch your emotions. If you are carried away or want to "recoup" - pause, calm down.
When important news comes out. Many traders get excited about important news and calculate profits in advance. But there is no need to share the skin of an unkilled bear - excessive self-confidence has not done anyone any good.
It is worth trading with a cool head and fully accounting for your own actions. Like in poker.
11. Take responsibility for the result and analyze mistakes
Only you are responsible for your wins and losses in Forex - neither the author of the strategy, nor the broker, nor the insidious price, the news that did not come out inopportunely. Accept this and you will spontaneously begin to analyze trades much better, weighing the pros and cons, evaluating many factors. As long as you blame others, serious work will not come out.
Record and analyze your mistakes. Find the reason for the failure of the trading system. Don't get frustrated and take care of yourself. Remember that losses are valuable in that you gain knowledge on how to trade not to.
12. Don't trade on the news
If you are not among the professional traders, then you should not go out on the news. The price at the time of the release of important data can behave unpredictably, so you need to have remarkable experience in order to get out of an unexpected situation.
Some strategies involve trading on the news. If you are determined to make money in this way, it is recommended that you practice on a demo account for at least six months: this way you will encounter most of the possible situations.
Before the release of news of medium and high importance, it is better to close all positions opened in accordance with technical analysis. This must be done at least half an hour before the publication of the data. It is also better not to exit the market within half an hour after the announcement of the news.
13. Don't Forget About Stop Losses
The trader must be able to fix the loss. To do this, do not forget to set stop losses - their presence is provided for by any strategy. If your trade was stopped out, you should be glad that this limited you from even bigger losses.
Some strategies provide for the presence of a trailing stop - you should not neglect it, since the presence of a “creeping” stop loss allows you to transfer transactions to breakeven and trade without fear of losses.
Once set, the feet should not be moved, otherwise they are of no use! This vicious practice can negate all efforts to preserve capital, since in 90% the price will still not turn in the right direction.
There is no need to hope that you will be able to close the trade manually, especially in a stormy market. The price can sharply go in the opposite direction, and you will suffer much larger losses.
14. Don't go against the trend
A trend is a powerful price movement in a certain direction. Often it is determined by fundamental data - i.e. depends on economic events. Trends are short-term and long-term, the latter being more important. That is why, when trading on any timeframe, you need to take into account the direction of the price on an older time period and try not to open a deal against it.
Even if your trading strategy is flat, the trend should be taken into account, since the price can go in its direction at any time. If your strategy involves trading against the trend (for example, on pullbacks), you should understand well what you are doing.
15. Use advisors
Trading in manual mode is tiring, a trader makes mistakes during intensive work, especially if a scalper or intraday strategy is chosen. With zero trading experience in the forex market, it is better to use automatic assistants - advisers or robots as a help. The difference is this: the former are looking for an entry point, and the decision to open an order remains with the trader, the latter trade completely on the machine (moreover, advisers in most cases also have an automatic trading mode).
