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5 tips for new forex traders

Discussion in 'Chit Chat Lounge - For Off-topic Discussions' started by Paul Jarvis, Feb 18, 2016.

  1. Paul Jarvis

    Paul Jarvis ECZ Newbie

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    5 tips for new forex traders

    Forex trading is full of opportunities but also riddled with pitfalls. The thrill brings in new traders constantly but most likely they are there for the easy money that was promised in an ad somewhere. Unfortunately, these riches are available only for a lucky few who get it right on the first trade. For all the rest of us being careful, having a solid trading plan, good trading conditions by the broker and low fees are a must to stay profitable. So here are 5 tips that could help you push your trading career to the right direction.

    1. Start with a demo account. When you first go out to the world of forex you will have the risk free opportunity to trade on a demo account. This will give almost identical conditions for trading a real portfolio with all the ups and downs of the market. Just be sure that you treat the money on a demo as you would on a real account. This will give you a realistic feeling what could happen to your hard earned cash. Caution though when using the demo to judge the performance of trading systems which have a large number of trades, this is one place where the real results can later be lower as slippage comes to play.

    2. Choose a broker that gives you low trading costs. A big part of any forex strategy staying profitable is the cost you pay on every trade. This is especially true to very active trading styles making 5 or more trades a day. These days the low end of commissions can be as little as $2 per $100,000 traded.

    3. Don’t be lured in by huge bonuses of 100% and more by brokers. A good broker might give you a nice boost to start with a 25-50% bonus and you have to appreciate it as brokers give away their profits even if their trading costs are already the lowest in competition. But don’t run for 100%+ bonus offer as attractive as they may sound, these are mostly cold calculations by low moral brokers to lure you into making large deposits after which you will be riddled with fine print in conditions, withdrawal restrictions and high commissions. You have to understand that these brokers will want to make their money back from you as fast as possible.

    4. Look for ECN/STP brokers. A broker using either of the technologies is more likely to be on your side. Why? Because they don’t keep your trades in house. A STP or straight through processor will send your trades to the open market place and has nothing to win from your losses than a sole B-book broker which trades against you and wins everything you loose and also loses everything you win. You can see the conflict of interest here as they have the upper hand here.

    5. Don’t always go for the highest leverage accounts. While some brokers will offer you 1:1000 leverage on your money this also increases the risk both for you and your broker. Leverage like that means that it is solely backed by the broker you trade with as no prime brokers give leverage like that to the end user serving forex broker. This means it is not doing STP (read point number 4) and just wants you to lose as fast as possible for their gain. A leverage of 1:200 or less is beyond most people’s needs and is something you should go for. For comparison US regulated brokers aren’t allowed to give more than 1:50 leverage.

    Written by TradeWiseFX Team -

    Source - http://www.tradewisefx.com/5-tips-for-new-forex-traders/
     
  2. elegantguy

    elegantguy ECZ Newbie

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    Thanks for sharing such a nice information. It is very good information which will allow the newbies to become successful in trade.
     
  3. bugsypal

    bugsypal ECZ Member

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    I still trade demo account besides my live account at hotforex, i usually back test my strategies before applying them to live accounts. For me demo account is pretty easy way to test any broker before finalizing them.
     
  4. Thrasher

    Thrasher ECZ Member

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    That's quite a nice article you have shared here, thanks for sharing it here, and do keep sharing it.
     
  5. bugsypal

    bugsypal ECZ Member

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    Yeah, good to hear valuable posts from other fellow members and I believe sharing is caring so keep sharing your knowledge guys..!
     
  6. Thrasher

    Thrasher ECZ Member

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    Yeah, this forum, is full with informative articles, all you need to do is just a little research. Through that you could find the best one for you.