Forex for Beginners
The international currency market Forex has become an interesting phenomenon in the economy. For the first time, ordinary people have the opportunity to feel like one of the small screws of a massive mechanism in the world of currency transactions.
The differences that make up the basis for trading in the Forex market:
It is where the whole trading process is based, so every beginner should pay special attention to studying these aspects.
Any operation on the market is the result of data analysis. A commodity in the Forex market is currency, and its value depends on many factors, for example, political events, changes in the economic sphere or natural disasters. The main goal of a trader is the ability to make conclusions based on incoming information. It is the principle of fundamental analysis, where changes in quotes may depend on the behaviour of banks or government agencies. The ability to use this information correctly becomes a way to predict changes in prices and conduct a proper trading strategy.
In contrast to the fundamental, technical analysis is based on mathematical formulas. The field of activity for a trader is a chart, on which all changes in currency pairs quotes are visible, so mathematics may well become a tool to identify the price direction. The main principle of technical analysis is an axiom that all subsequent events on the currency quotes market can be predicted using previously obtained data. This approach is quite reliable, and it can be recommended to a beginner.
In addition to strategy development, trading in the foreign exchange market requires knowledge of how to manage capital. The fact is that most novice traders have only general information about how to manage risk properly and their wealth. Emotions and a thirst for profit push to the constant dealing, the trader forgets about his account and closes his eyes to the danger. And the result is that the account is quickly empty, and the beginner has to leave the field of activity.
Any trade is a complex process, where emotions do not always become a good support for work. Forex gives a rare opportunity to earn quickly and a lot, and this combination can push the most desperate acts.
The main psychological problem of trading on the foreign exchange market is that the greed of a trader will continuously come into confrontation with caution. On the one hand, every unsuccessful transaction will hit your account, but on the other hand, only decisive actions will help you earn. In addition to this challenging struggle, many psychological factors affect the work of a trader.
If you decide to become a professional trader, you will have to fight with the following points of your psychological behaviour:
The desire for an easy and quick profit.
Excessive involvement in the trading process.
Failure to allocate work correctly and to follow the schedule.
Uncertainty about your own decisions.
Lack of own opinion and following someone else's strategy.
So a real Forex specialist should study not only literature on analysis and risk management but also textbooks on the psychology of behaviour.
Trading in the currency operations market is carried out according to the following principle. A trader applies to a broker, and he already grants the right to enter the market. There are many such companies, and it is quite challenging to choose among them the one that can become a reliable bridge in the unstable financial world. Several factors will help make the right choice and work with an experienced and professional broker:
A broker must be trustworthy.
Information about changes in the value of a currency must be current and accurate.
All your orders must be executed without delay or delay.
The broker's commission must be reasonable.
Frequently asked questions about Forex
Can I trade without fundamental analysis?
You can; it is enough to take into account the time of the release of particularly important news.
How to solve problems with psychology and self-control?
The only way is to continually practice and try yourself out, to trade only according to the strategy rules.
Is it possible to occasionally disrupt the management of particularly strong signals?
It is not recommended for a beginner, but a trader with experience may sometimes increase the risk.
Is it possible to trade only on fundamental analysis?
It is better to add elements of technical analysis to the strategy.