Invest Your Money Wisely With These 3 Forex Tips From Successful Traders

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It's best to know the market before you reap the benefits forex has to offer. These tips from successful investors can give you a head start.

Successful people like Warren Buffett and George Soros swear by investments to help grow money. Although stocks are seen as the traditional way to trade, beginners are better off starting with smaller, short-term investments — like those found in the foreign exchange market. 2022 could be especially profitable for American traders: the value of the US dollar recently reached a 20-year high despite economic uncertainties.


Forex involves trading in currency values, making it the largest market in the world. FXCM outlines how the forex market also makes for convenient and efficient trading due to the decentralized market being open 24/5 as well as being accessible remotely with just an Internet connection. You can even use minimal funding to get started.


Develop a strategy



"You have no business trading without a trading plan." — Kathy Lien, author of The Little Book of Currency Trading


Currency values fluctuate often due to several factors, including global events like COVID and long-term government financial policies. Having a strategy will increase your chances of turning a profit, and the most effective one will depend on your investment goals. Are you saving money for retirement, a new house, or your child's future education? These questions will help you determine the timeframe for your investments.


In the short term, try day trading. This involves opening and closing trades within market hours, so you're liquid by the end of the day. Conversely, there’s longer-term position trading. Identify a current trend that may affect the demand for a given currency, like far-reaching policy decisions from the Federal Reserve. Wait for the trend to reach its peak and open or close your trade accordingly before it founders. Whichever you choose, it's important to staunchly stick to your strategy to lower the risk on your trades.


Know the market



"Do everything you can to increase your chance of winning, while limiting the risk in each trade." — Bill Lipschutz, co-founder of Hathersage Capital Management


Familiarize yourself with the market before jumping in. Online, you can access classes, articles, and e-books curated by seasoned investors like Thomas Kralow and Ezekiel Chew. These can teach you both basic and advanced forex strategies like opening and closing trades, identifying trends, and designing algorithms that automatically place trades for you.


You can also use a demo account to practice trading without risk. The MetaTrader 4 platform is popular for both PC and mobile users. It works for virtually any trading strategy while providing comprehensive analytics with thousands of indicators. MT4 even lets you copy strategies from successful traders to help you get started. With platforms like this, you can discover which strategies work best for you and enter the market with more confidence.


Never give up



“If you can't take a loss and accept you were wrong, you will never be a successful trader." — Joel Kruger, FX trader, and NFT collector


The wisest way to enter forex trading is to start out small, work your way up, and ultimately have the patience to do so. From the simple day and position trading strategies mentioned above, you can start using what we believe are the ‘Top 3 Indicators Every New Trader Should Use. This includes Bollinger Bands, moving average convergence difference (MACD), and the 50 And 200-Day EMAs.


Such a broad logical strategy will ensure you only take on trades you can afford. Along with this, it's crucial for you to learn how to move on from your losses. Loss is always a possibility. However, your success is dependent not on how many losses you incur, but on how you deal with them.