Evaluate Yourself

One of the biggest mistakes people make when they start trading is thinking they know more than they do. Forex trading platforms are generally designed to be easy to use, but the world of trading is very involved and there’s a lot to learn.

Assess your current level of knowledge, and be honest with yourself if you think there’s more you need to learn. Build up your understanding before getting into any significant trades so that you don’t make any big mistakes at the start.

A lot of people who give up on trading do so because they make large losses quickly. Take the time to figure out what you’re doing first before taking any major risks.

Choose Your Trading Style

There’s no such thing as a ‘perfect’ trading plan. Different people use all kinds of strategies, so along with learning how things work, you should research different styles to find one that suits you.

Day trading, for example, is when people open and close a position on the same day. This is ideal for short-term profits.

Scalping is similar but involves placing multiple trades each day. This is done for small profits over a very short period.

Trend trading is more in-depth, and works over a longer period. A lot of research and technical analysis are required for this.

You need to look at the different options and figure out how you want to trade. If things don’t seem to be working out with one method, you could always change styles.

Pay Attention to Trading

You should always keep an eye on the market, but do so calmly. You can’t profit all the time, so don’t let missed opportunities get to you. Emotional decisions often result in losses, so stay focused, and trade based on logic rather than excitement or fear.

You should also keep an eye on the news. Significant world events can impact the value of certain currencies, so this could affect your trade decisions.

Set Risk Level

Trading is always risky, but you’re in control of how much risk you take. In most cases, the higher the risk of a trade, the higher the potential reward. This encourages many people to make some very risky investments, with the hope of making huge returns.

While this can seem enticing, it’s not always the best choice – especially if you’re new to trading. You should take your funds into account when doing this.

Going all in on a very risky investment is generally not a good idea. If you have a lot of money to invest, however, you can probably afford to make some smaller, riskier trades as you’ll still have some capital left over if they don’t work out.

Select Pairs to Trade

Forex trading offers plenty of different pairs, so you should determine which ones you want to trade. Start by creating a watchlist of your favourite pairs, then look into the economic data for each one. Micro and macroeconomic reports will help you understand the direction of price movement due to things like GDP (gross domestic product), CPI (consumer price index), inflation, and exchange rates.

You can use this knowledge to help you with technical analysis. If you can do this well, you’ll be able to determine the best entry and exit points so that you can maximise your profits.

Intermarket analysis isn’t essential, but it can help. You can use it to increase your probability of making winning trades. You should also consider specific trading sessions depending on the pairs you want to trade.

Plan for Rollover Rates

Trades are typically closed at the end of the day, but a rollover is when a trade settlement date is carried over to the next trading day. The rollover rate is the overall interest return that you can make on a held position.

Most forex exchanges will display rollover rates, so you shouldn’t need to calculate these yourself. You can analyse them to help determine whether you should close a position or carry it over to the next day.

Readjust Your Trading Plan

You should develop your plan before you start trading any sizable amounts, but once you’ve started, you might notice certain aspects of your strategy aren’t as effective as they could be. You should constantly assess your trading plan to determine how well it’s working.

When you notice any weaknesses in your plan, you can work to make improvements. Over time, your strategy will improve, allowing you to become better at trading and make bigger wins.

This is especially important when you experience losses. Try to determine what went wrong, and how you can prevent it from happening again.

Know the Regulations Where You Trade

Trading laws vary based on location. You can use the forex market from anywhere in the world, but you need to make sure you’re abiding by the laws of the country/state you’re in.

Throughout South East Asia, Singapore is the largest forex trading hub. It has a strong regulatory framework, and the 5 largest banks in the world have their FX teams based there.

Regulations can vary significantly, so it’s important to look into what the rules are in your area. This will ensure you don’t break any laws and end up facing legal issues.

Online Trading With the Liquidity

Once you have a plan in place, you can start trading. The Liquidity is a first-class broker that offers some of the best investment services available. Our online trading platform gives you access to the forex market, as well as others such as indices and shares CFDs.

You can create an account with us and start your trading journey today.