The forex market is officially the largest trade market in the world. The daily amount traded exceeds $5 trillion every single day. No wonder all manner of traders want to have a share, from naïve beginners, all the way up to more experienced traders. While trading on the forex market is easy because you can put in your money at just about any time of day or night at minimal cost, losing money is also very easy because the market is competitive. So, how do you ensure that your trade is safe? Below are some important pointers to observe.
Make use of reputable forex brokers
A forex broker can make or break your investment. There are numerous brokers in the market and some may be scammers. Settling for a reputable broker ensures that your deposits are safe. Only choose brokers who are part of an association such as the National Futures Association (NFA). A true broker should also have his name in the Commodity Futures Trading Commission (CFTC) register.
Additionally, do your own research on a broker before hiring them. Check for aspects such as account offerings, commissions, initial deposit, and withdrawal policy. You can look for the broker’s customer care contact information and dig out all the details you need to know from them before you make a choice.
Start with a hypothetical account first
It is wise to test the waters before diving right in. Most trading platforms will offer you an unfunded demo account on which you can practice hypothetical trades. Having a simulated account is a good idea as it allows you to familiarize yourself with the operations of the account and avoid common and costly beginner mistakes such as pressing the wrong buttons or making a wrong entry.
No matter how much you have practiced and studied the market, it is prudent that you start small and see how things go. Do not let your emotions take the lead. Live markets can present different outcomes from what you had anticipated. Starting small enables you to practice and become more confident to put much more money in the trade.
Keep your trading analysis tools to a minimum
When you open an account, you may find a generous amount of technical analysis tools on offer, but to do not be tempted to use them all. You will be more effective if you use a few of the tools. For example, if you use multiple tools to check for the same indicator, the result can be opposing signals, which is confusing. Also, get rid of analysis techniques that you do not use regularly.
Keep your records
Ensure that you keep records of your failure and successes and every procedure and thought process that went into it. Reviewing your performance aids learning and keeps you from repeating past mistakes.
While forex trading can be profitable, approach it as a business. Prepare well, be patient, and know how to manage your money.