• Treat trading like a business, not like a game. We have been keeping an eye on the foreign exchange market for a long time and have trained many new traders from beginners all the way up to expert level. In our experience, those who enjoy the most success from their Forex trades are those who treat the experience of Forex trading seriously, like a business, rather than those who treat it like a game or like a form of gambling. When there are so many patterns and strategies to learn Forex trading available online, there is no reason you should take unnecessary risks. When you treat trading like a business, you are more likely to make cool and calculated decisions. When you treat Forex trading like gambling, you are setting yourself up to take risks that might not pay off.
• Expect short-term investments and turnaround. There is very little reason to hold onto your currency pairs. The most popular currency pairs to trade are ones belonging to economies that are considered highly stable, meaning there is little risk of the value of one nation’s currency absolutely plummeting (although it is not impossible to see a large-scale dive; for example, if a country is afflicted by a serious inflation problem). This also means there is only a very limited chance of a currency spiking in value. A currency pair can only increase in value so much before it can’t increase any further, so holding onto your currency pairs long-term doesn’t benefit you at all (unless, of course, you’re stuck holding onto currency pairs that you can’t sell without taking a major loss). So go ahead: pull that trigger and trade your currency pairs sooner rather than later!

• Be willing to watch the market for long periods of time. It is possible to make a profit on the Forex market by buying a few currency pairs and checking in on them occasionally when you find the free time to do so. However, this is a slow and not very profitable way to manage your trades. If you block out at least an hour or two of time each evening (or a few evenings a week), you can manage to score a few better trades than you would be if you’re a more casual trader, because you are watching the market and considering your options as the value fluctuates rather than peeking in once a week and selling your currency pair when the price looks “good enough.”

• Learn to value small profits. The Forex market is not a place where you can expect to find huge jumps in the value of currency. It’s extremely unlikely that you will wake up and find that 1 euro today can be traded in exchange for 8 U.S. dollars, giving you an eight U.S. dollar profit per euro. Instead, you should expect to see the value of a currency pair change by points of percentage, known as pips.

• Be willing to close deals and exit trades. It’s easy to feel overwhelmed, nervous, and start second guessing yourself when you are still new to Forex trading. Strive to close your deals with confidence. Accept that some trades are “just okay” and they aren’t always going to turn a large profit. You are learning every trade, and that’s great progress to be making for a days’ work.

• Don’t become overwhelmed with fear or regret. Loss WILL happen; there is no 100% guaranteed strategy to make profit on the Forex market, and even traders with decades of experience behind them will experience losses on a regular basis. Don’t let thoughts of losing money paralyze you. Instead, plan ahead of unexpected losses by trading only a small amount of money at a time. Losing a small amount of money will be much easier to swallow than losing a large portion of your savings.

Common Mistakes In Forex Trading

Jumping into trades without enough money behind you to get started. It is true that compared to day trading on the stock market, the Forex is much easier to get into, especially if your funds are limited. However, you always strive to be trading in the Forex market with extra capital and not your main savings, as it is easy to lose money on the Forex market if you get a little reckless. Many beginners are drawn to offers of high leverage, but relying on leverage is dangerous as it is a very quick way to lose a lot of money.

A recommended amount of money that you should be trading as a beginner is “no more than 1% of your capital per trade.” Even experienced traders are often cautioned not to trade with more than 2% of their capital per trade. Simply put, the Forex market is complex and it is easy to lose money if you aren’t careful. You should always trade with money that you can afford to lose if things go wrong.

If you don’t have that money yet, take this time to read up on the Forex market (like you’re already doing) and consider practicing your trades with a demo account. Demo accounts are easy ways to experiment with the market without risking real money, but you should know that many people rapidly lose money once they start trading with a live account if their only exposure to Forex thus far has been through a demo account. When you are trading with fake currency, it is easier to talk yourself into risky trades and the losses won’t hit as hard. If you apply the same thoughts or behaviors to your actual money, you could get into trouble once you start trading with a live account.

• Although it may seem counterintuitive to spend money while trying to save, it may be a good idea to invest in a Forex trading course from experts at this time. It is easy to forget information or not understand it while you are browsing articles on your own, and having expert guidance in the form of a Forex trading course is a great way to expose yourself to high quality material that you can understand even as a beginner.

Allowing Forex trading to consume your life. It’s a wonderful thing that the Forex market is a global market and it is open 24 hours a day five days a week, but that doesn’t mean everyone can (or should) become a full-time Forex trader. Don’t allow yourself to be blinded by greed, and remember to weigh the time you spend Forex trading against other aspects of your life: your day job, your hygiene, your partner, your hobbies, and so on. If you compare yourself too much to others who are profiting on the Forex market, you may feel pressured to trade all the time in order to “catch up” to where they are at. Remember that any profit you make while Forex trading is more profit than you would make if you chose not to engage in Forex trading at all, and don’t trick yourself into feeling guilted to spend all day trading if you would much rather be watching the new season of your favorite TV show. Remember to enjoy all things in moderation and you won’t only be making money, but you will be making yourself happier little by little every week, too!

Trading Psychology: Learning to Manage Your Emotions While Trading

When your money is on the line, it’s only natural that you may become a little emotional. You might become heated and reckless, nervous and withdrawn, or greedy and overconfident while buying or selling currency pairs. Obviously, this can be devastating to your wallet if you allow your emotions to get the best of you and this leads you to make a few very risky trades.

• Remember – Trading on the Forex market is all about making short-term turnarounds and quick decisions. The market is not designed to give you plenty of time to think about entering a trade. You will certainly make a few impulsive, poor choices during your Forex trading career, but the way to profit on the Forex market is to limit the number of mistakes and earn the most profit you can.

Common Emotions While Trading

There are several emotions you will surely experience while trading:

• Fear – If you become too fearful, you may experience loss aversion. This can make you too nervous to buy currency pairs even while the price is low (perhaps believing that the price will continue dropping or that it’s too expensive to purchase) and being too fearful to sell (likely hoping that the currency pair’s value will continue rising to the point that you feel absolutely certain you are getting a good deal). If prices start dropping, you may experience panic that can also limit your trades and cause you not to profit on the market.

• Greed – Where money can be found, greed is sure to follow. If you get carried away by thinking of all the money you’ve been able to make while trading thus far, you may be tempted to open larger positions. If you struggle with greed, we recommend that you take time to let the profit you’ve made sink in; perhaps take a walk to think about what you plan to do with that profit (and more importantly, the patience you had in achieving that profit) before you begin opening new positions. Money can be lost very easily, so appreciate what you have before you splurge.

• Impatience – Impatience can get the better of you when you are dissatisfied with the Forex market’s “slow and steady” way of accumulating profit. If you become too impatient, you might leap out into the open and make a huge deposit… which could horribly backfire and put you deeply in the hole, all from a small moment of emotion. Remember to take a step back and look long-term at how you’ve managed to grow your money over time. Consider setting an end goal (especially one that isn’t time sensitive) for what you would like to spend the money on so that every day, you can see yourself progressing closer to that goal.

• Anger – Most of us definitely experience disappointment, annoyance, or outright anger when things don’t go our way in our daily lives or on the Forex market. If you lose a trade and let anger get the better of you, you might react by rushing to open a lot of trades in the hopes of making back your money. Be cautious and don’t allow yourself to overspend just to make a small amount of profit. Regulate this reaction by giving yourself a budget and sticking firmly to it.

When you keep yourself grounded and handle your emotions with a cool and collected mind, you will have a much better trading experience (and so will any dependents who rely on you to be cautious with your money, too)!

There is so much to learn about Forex trading, and if you still aren’t sure how to jump into it after reading this post and our article on Forex trading for beginners, then we recommend you sign up for a Forex trading course from Guerrilla Trading. It isn’t just our passion to trade for our own benefit, but we also love to see new people curious about the Forex market and we hope to help you avoid making costly mistakes that could leave you short on funds. With a little research time and practice, everyone can learn to start making a profit by trading on the Forex market. So why wait? Find a Forex trading course that suits you and start broadening your skillset today!