Can you make money trading forex? Yes you CAN! Traders can make money in forex by opening buy and sell positions on the market. The forex market allows you to trade many currency pairs such as the dollar, euro, pound, yen, and other currencies.
To be successful in trading, you need to be determined and focused on trading and this takes time. Forex involves real money and when you use real money it’s more stressful for you to trade. To improve your trading performance, use the risk management and other factors are very important in forex.
And, in this article, we will give some tips that can help you make money trading online forex.
Choose A Reputable Forex Broker
Using a reputable broker is very important for your trading experience. To find a reputable broker you’ll need to research the broker that you’re joining. And most importantly, you’ll need to use a regulated broker.
Avoid brokers that are unregulated and have a low score of positive reviews. This can help you to determine that the broker is not reputable. To see if the broker is regulated, you can visit the about page on most of the brokers or at the bottom page.
(Need help choosing a forex broker? Have a look at this forex trading platforms review article here.)
If you use a reputable broker, you don’t have to worry about scams or stop hunts. A reputable broker will offer you competitive spreads and commission. Forex brokers are regulated with licenses in different countries.
Most of the forex brokers hold a license from regulators as:
- United States National Futures Association (NFA)
- Financial Conduct Authority (United Kingdom)
- Cyprus Securities and Exchange Commission (CySEC)
- Australian Securities and Investment Commission (ASIC)
- Swiss Financial Market Supervisory Authority (FINMA)
If you want to learn how to make money on forex join our free forex trading academy here.
Practice On A Demo Account
Before you sign up for a real money trading account it is important that you sign up for a free paper money trading account. Before you can make money trading forex you need to learn how to “lose money” the right way, if you will Trading on a demo account is crucial for your journey as a trader. Demo trading helps you to prepare yourself before you jump on a live account with real money. You can easily create a demo account from your broker or create one from the trading platform that you’re using.
If you trade on a live account without enough time spent on a demo account it can have negative results for you as a trader. When you trade on a demo account for a long time, you’ll be more prepared as a trader. Demo trading will help you to find trading strategies, use risk management, learn how to react to losing trades, and more.
Use A Trading Plan
If you want to know how to make money trading forex with no previous experience then the best strategy is to have a trading plan. You can’t just wing it and try to do day trading for a living and just wing it. A forex trading plan can improve your trading performance. When you use a trading plan you’re organizing your trades and decisions. The trading plan allows you to create a list that you should not do in trading. Using a trading plan is very important especially when you trade on a live account.
Trading on a live account will affect your emotions and can lead to unpredictable decisions. With a trading plan you’ll be able to control your decisions and not trade based on your emotions. Besides emotions, a trading plan can improve your discipline in general. In a situation when you’re facing bad trades, the trading plan will help you with the right decisions.
In general, the trading plan it’s recommended for all traders, especially for new traders. Most of the new traders don’t know how to react to different market situations and this can lead to mistakes. With a trading plan, you’ll be able to control your trading decisions by using the proper risk management, and not trade based on your emotions.
Equally important to having a trading plan is to journal your trades and if you want to be trading for a living you need to keep track of your trades. You need to write down all of your trades that you make. Get organized. It’s how the professional traders do it. We recommend logging your trades into a trade journal as you make them. Make 20 trades, journal them then go back and review those trades. You’ll learn a lot about your progress or lack-thereof and be able to analyze your trades. Journaling your trades is one of the easiest things to do in trading but most new traders don’t take the time to do it. If you are going to be successful at trading then learn to journal your trades and review them either at the end of the day or at the end of the week. No need to review each trade until you have a good dataset of trades. Meaning that 20 trades is a good number of trades to be able to review and get a good feel for your progress. If you want to be day trading as a career this is one of the most important steps.
Learn From Your Mistakes
You can make a living trading forex but you need to get accustomed to also making mistakes and losing when you first start. Mistakes happen to both new and experienced traders. But, the difference between the new and experienced traders is that the experienced traders learn from mistakes. New traders are not familiar with trading due to inexperience and this turns them into unpredictable decisions.
You should be able to learn from your mistakes and try not to avoid them in the future. Even the experienced traders do mistakes after many years spent on trading. But, they’re able to learn from the mistakes and not repeat them. That’s what makes forex traders much effective in trading.
If you’re a new trader, you should learn from mistakes by analyzing your past mistakes. To analyze your mistakes, you can use a trading journal or backtest. One of the most important factors in trading is to backtest. When you analyze your past mistakes you’ll understand the key mistakes that lead to the wrong decisions.
Backtesting will improve your trading if you analyze the past market data. Besides backtesting, you’d check your past results from the trading journal. Keeping track of your trades by writing them in a trading journal can help you to analyze your trades easier and learn your mistakes.
Don’t Get Emotional During Trading
Emotions in trading are important as they are key factors to your decisions. In situations when you’re facing losing trades, the emotions can become overwhelming. This can lead to unpredictable decisions because of uncontrollable emotions, especially FOMO (fear of missing out). To avoid emotions in trading, you should stick to your rules in trading. Getting into a trade and out of a trade at the right place will help you make money trading forex and make a living trading forex.
Following your trading plan and journal will help you to avoid emotions in trading. Greed in trading is very common and it can lead to bad results. When you close trades on profits, the greed will become a factor in your decisions if you’re not sticking to your trading rules. Greed can also affect your risk management rules and push you to commit mistakes.
To avoid emotions and greed, you should use risk management. By using risk management on your account, you’ll be able to control how much to risk. (To see our position size calculator click here.) Besides risk management, you should analyze your trade results by backtesting them.
If you are new to forex trading and you want to learn more about you can join our free trading academy where we have many forex trading tutorial.