Breaking into the Forex Marketplace: How Beginners Can Beat the Odds

Learning any new trade or skill can be a daunting prospect for beginners. This observation is even more relevant when looking at the Forex marketplace, as it can be confusing and downright at times. Still, you will not have to be gifted with the any magical form of financial divination in order to take advantage of the potential rewards that are in store. Let’s take a look at a brief selection of tactics and strategies that can help you to leverage the immense power of this currency trading sector.

Taking Advantage of Short-Term Liquidity 

In order to capitalise upon the Forex sector, beginners first need to appreciate its sheer size. The most recent statistics have observed that up to $5.2 trillion dollars changes hands every single day. It is also interesting to note that average day traders comprise a significant portion of this volume. This is why most novices will become in short-term ventures as opposed to long-term positions. These options tend to be much easier to predict and as entry levels are flexible (more on this in the next section), you can turn a profit without becoming overly exposed to any unnecessary volatility.

Knowing Your Limitations 

When Socrates penned the memorable phrase “know thyself”, he was not likely referring to the Forex markets. Still, this approach is of critical importance. You need to ask yourself very specific questions in order to determine when your reach could possibly exceed your grasp. Some questions to cover include:

  • What are my monthly trading limits?
  • How often will I trade and when will these trades take place?
  • Which currencies am I the most comfortable trading with?
  • What situations will make me feel distracted or overly stressed?

Knowing the answers to these seemingly simple subjects will provide you with an edge that is not often enjoyed by other novice currency investors.

Keeping Ahead of Changeable News 

It has been said that the markets are bought on rumour and sold on fact. In other words, you need to keep one eye directed towards any currency-related news. A recent example serves to highlight this observation. For months, experts have been quoted as saying that the pound will soon reach parity with the euro due to the ongoing Brexit negotiations. It now seems as if some are beginning to change their tune.

Major hedge funds such as Capital Economics are now claiming that we will not experience nearly as much of a dip as previously thought. Assuming that you had been following the news when this statement was released, you would have likely been able to take advantage of any sudden knee-jerk reactions such as a short-term strengthening of this British currency. The main takeaway point is simple. Staying informed will provide you with a solid and flexible investment strategy.

Choosing the Correct Trading Platform 

Many would-be Forex traders have had their dreams cut short by becoming involved with less-than-reputable online investment platforms. This is a mistake that can be easily avoided by performing some basic research. What are others saying about the services provided? How many underlying assets can you access? Can you log into your account via a mobile device? Are all prices updated in a real-time scenario?

Only select those portals which can boast a solid reputation such as CMC Markets, for you could otherwise be putting your hard-earned money at risk. If you adopt this stance as a beginner, you will have constructed a solid foothold within this amazing marketplace.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.