These answers highlight some of the best practices that novice forex traders should follow.
Ebuka Ambrose, a seasoned trader with over 2.5 years of experience, answers the questions beginners often ask him below. He has hosted many virtual and physical educational events for OctaFX. Here is one of his recent question and answer sessions with Nancy Isime.
How much does a trader need to start trading forex?
How much capital a trader needs varies greatly. People have different profit goals and risk tolerance.
Forex brokers also have their minimum deposit limits. OctaFX sets its limit at just $40, one of the lowest out there, opening up the Forex trading market to many in lower socioeconomic strata.
Best Practice: It is advisable to practice strategies on a demo account until you are confident enough to go live with a real account. Deposit just $40 on OctaFX to start earning.
Which currency pairs should I trade as a beginner?
< p class="align-left">It is advisable to start your trading journey with the popular currency pairs. Typically, you want to stick with currency pairs that are related to the United States Dollar (USD). The USD market is very liquid and volatile, so you are likely to make profits faster than other currencies.
Based on historical performance and global trader acceptance, here are the most popular ones Currency pairs to add to your trading portfolio: USD to EUR; USD to JPY; USD to CAD; GBP to USD; USD to CHF; AUD to USD.
When is the best time to trade?
Although the Forex Since the market is open 24 hours a day, there are periods when the market is particularly active.
These periods are called trading sessions. There are four major trading sessions that take place during official business hours worldwide: Sydney (Australia), London (UK), Tokyo (Asia) and New York (US) sessions. Each trading session lasts 9 hours.
The best trading time is when markets are very active and experiencing high volatility (ie active price movements). When markets don’t move, traders don’t make money. Simple logic suggests that you can see the highest market volatility when more than one trading session is open. It is advisable that you trade when two or more trading sessions overlap – that is, when multiple sessions are open.
Here is an example of a good time to trade: The New York session begins at 1:00 PM Nigerian time and ends at 10:00 PM.
London session begins at 8:00 AM Nigerian time and ends at 5:00 PM :00 am. The intersection of these two sessions (1:00 p.m. to 5:00 p.m.) is a great time to trade.
What sources do you use to analyze the forex market?
What sources do you use to analyze the forex market? strong>
The forex market can be analyzed in two ways – fundamental analysis or technical analysis.
The Fundamental analysis requires you to analyze the market based on events and news happening in a country whose currency you wish to trade. Some brokers, like OctaFX, provide their clients with reports on events and statistics in a country such as employment rate, inflation rate, GDP and many more in their economic calendar.
Technical analysis analyzes the market based on what you see on your forex chart. Historical data and fundamental economic data such as demand and supply play a major role here. Technical analysis thrives on the unwritten principle “What has happened before will probably happen again”. In the OctaFX trade view you can view trade ideas, strategies, opinions and analysis absolutely free. You can get market insights through the OctaFX YouTube channel, webinars, live trading, etc.
How do you close and open an order?
After the analysis is complete, you can decide to open a Opening orders that you want to believe will bring you profit. In this case, all you have to do is select the instrument you want to trade. Then enter your lot size, take profit and stop loss levels. You instruct your broker to take you out of the market at extreme levels that you have preset for profit and loss. In the last step, click on “Buy/Sell”. Your trade is now open.
Click to close an order Open the trade and then an exit button (usually an X) and you’re out. It’s that simple!
How much risk should be taken per order?
If You think about opening a trade, think about how much you can potentially lose on a trade. While the thought of how much money you can make is playing around in your head, you should always consider the risks involved in your trading. With conservative strategies, your risk level should be no more than 1% of your trading balance per trade.
If you have a $1000 account, you should only allow a $10 loss a single trade. That way, with an appropriate stop-loss level, it’s next to impossible for your entire portfolio to be wiped out in a single trade when things go bad. By keeping your risk per trade low, you have more leeway to open multiple other trades at the same time.
You may find that other professional traders use a larger percentage of their account size risk their trading strategies. Remember that different people have different risk appetites, often built through experience in the market. What both beginners and pros have in common is that it is in everyone’s best interest to lose as little as possible.
How do you control your emotions when trading Forex?
– Beginners need to realize that losses are an essential part of forex trading. There’s just no way to avoid it completely. Any trader, even the very best forex trader, will lose at least a third of all the trades they take.
– Implement strategies that you want to use to mitigate losses and reduce the risks on your trading account. That way you don’t get too confused that you can’t have a clear head to reach set profit goals. We call this “tilting”.
– Don’t rush to cut your losses. If you lose, it’s not the end of the world . Stick to your trading plan. You will be amazed at how high your compound interest will be.
– Protect your capital. Your deposit is your instrument to earn profits. If you don’t have money to trade, you can’t make money in the market.
What are the key characteristics of a successful forex trader?
● A successful trader is an educated trader. When we say “education” we don’t necessarily mean formal education. Rather, it is applicable knowledge of the foreign exchange market. You must understand exactly how the market works in order to be a successful forex trader.
● Think profit percentages, not money. This makes it easier to separate your emotions from your trading experience. Win or lose, your rationale should be that you increased (or decreased) your trading portfolio by a percentage, not actual money.
● A successful trader is patient and consistent. Showing patience when entering a trade and having patience as a trade develops are essential ingredients to successful trading and investing. You don’t want to be the type who impatiently closes a trade just before the trade goes in the direction you want. Leaving profits on the table can be detrimental.
● A successful trader does not chase money. Whatever profit you make in the market is the reward of a successful trade. Focus on having more successful trades than unsuccessful ones. Forex is not a get rich scheme. If you spend your time chasing money, you’ll probably never get it.
It’s better enjoyed with friends. OctaFX has an affiliate program called Refer a Friend. You send each friend a link to learn and trade with you, and you get rewards for each person you successfully refer.