The forex market is a huge and highly lucrative entity, with an estimated $6.6 trillion traded globally every single day. This volume has increased markedly as the forex market has become increasingly accessible to part-time traders, but anyone looking to invest in the currency for the first time will need to be wary of the volatility and incredible liquidity that underpins the foreign exchange.
The key is to find a forex trading strategy and platform that works best for you, so here are some ideas to keep in mind when trading currencies for the very first time.
Develop a Manageable Your Trading Schedule
We’ve already touched on the rise of part-time traders and the impact that they’ve had on the marketplace, but this type of investor is typically required to operate in a relatively narrow window.
So, you’ll need to create a trading schedule that is tailored to suit your own personal circumstances, depending on your work and family commitments, preferred currency pairings and the time zone in which you live.
Remember, the forex market operates across three geographical sessions during each 24-hour period, while there are also significant crossovers that tend to see increased trading volumes and more pronounced price fluctuations.
We would recommend targeting such periods where possible, while creating a manageable schedule that optimises the hours with the most active trading pairs. You should also consider using a mobile trading app to access the market on the move, as this will introduce an additional layer of convenience and make it easier to execute profitable trades.
Minimize Your Risk in the Real-time Market
When you trade through an online brokerage site and a compatible mobile app, there are ample tools that you can use to minimize risk and prevent losses whilst you’re busy carrying out your day job like reliable forex signals.
Stop-loss orders offer a relevant case in point, as they work by automatically closing specific trading positions once they’ve incurred a predetermined level of loss. This serves a critical function in the marketplace, as the margin-based nature of forex trading can cause investors to lose far more than their initial deposit.
Modern-day forex accounts are increasingly automated too, and this also creates opportunity for you to manage risk successfully. For example, you can set up automated notifications and alerts on your account, with this information delivered directly to your nominated devices in real-time.
Engage in Price Action Trading
You can also minimise risk through relatively simple trading practices and techniques, such as understanding the odds and risk associated with each individual trade.
You also need to measure influential macroeconomic and geopolitical factors that exist outside of the market, with the coronavirus offering a relevant case in point at present.
The forex trading strategy of price trading is also a simple way of effectively minimizing risk, as this encourages traders to read the market and make subjective decisions based on recent and tangible price movements.
This prevents traders from relying solely on technical indicators, which require a degree of interpretation and aren’t always ideal for new traders as they enter the marketplace.