1. Focus on one or two Currency Pairs
First, focus on only one or two currency pairs. When you're new to forex trading, it's tempting to see opportunities in every pair, even ones you're unfamiliar with.
I got into trades after they'd already passed and got hit by news events I never heard of. I see trades developing much sooner, and I'm better prepared to take advantage of them, as well as manage them once I'm in the trade.
As a beginner to forex trading, I believe that you should stick to one or two currency pairs. I would advise you to go with the currencies that other beginning forex traders have traded most successfully.
2. Pick a Currency Pair that's a Winner
Whoever bet right realized a very big profit. Approach the Seven Deadly Pairs with extreme caution, and only after you've learned with other slower moving pairs.
Now for the Friendly Five currency pairs. Notice they're almost all Euro pairs. It is not highly traded, not very well known, and it has rather wide spreads.
3. It's Your Choice What to Trade
Of course, you might have a good reason for trading a currency pair not in the Friendly Five. For instance, when I started trading forex, I went with USD/JPY.
Why? As I began trading the yen, I got to know some of its price patterns. Speculators around the world had been carry trading for years, borrowing low interest rate yen to buy high interest rate Australian dollars or British pounds and earning the interest differential. This trading seems to move the yen pairs in an almost predictable pattern.
4. Forex Trading Research Is Vital
That much I learned by simply watching the price charts and actually trading. But trading experience takes you only so far. To improve my trading I had to know a lot more about yen behavior and the Japanese economy. To really learn forex I started to seriously research the pairs I wanted to trade. It was time well spent.
5. Don't Trade During the News
You must monitor news events. And analyze news events. But you shouldn't trade during news events – especially the ones that rattle the market, like GDP and employment releases.
The fact is that during news events, forex trading can be as capricious as rolling dice.
6. Trade in Small Lot Sizes
Realize that you will make bad trades, and plan accordingly. So trade small and keep your leverage small until you've got the hang of it. Then make your bigger trades.
7. Ready for a Forex Trading Account, Where Do You Start?
The best way to start trading is to open a micro account. Choose good, low volatility, low spread pairs to start
Do plenty of research to learn your pair
Do not trade during news events
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors.
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