UNDERSTANDING CURRENCY PAIRS

When you look at a currency pair such as the EUR/USD, you need to understand the structure of the pair and how pairs are quoted so you’re sure whether you want to place a buy order, or a sell order. Let’s take a look at the GBP/USD pair as an example: Currently the pair is quoted around 1.30 (Rounded for ease), this means that the base currency (GBP) is worth 1.30 of the quote currency, sometimes referred to as the counter currency (USD), so if you believed that Sterling would rise against the Dollar, then you would execute a buy order on this pair, if you believed the reverse to be true, then you would execute a sell order instead.

PAYING ATTENTION TO THE NEWS

Something a lot of beginners seem to neglect is financial news. It is imperative when learning forex for beginners that you get into the habit of keeping yourself updated every day on what’s happening in the markets, and what’s going to happen in the future. For example, when central banks alter their interest rates, you can expect a movement in the market.

ABSENCE OF CLEAR DIRECTION

Undoubtedly, the forex markets are risky and unpredictable. But it does not mean that you should become casual in your approach to deal with that unpredictability. Rather, your consistent approach to the market could give you the real exposure that could help you to steer clear of the problems in the course of trading. Beginners randomly pick up a deal and make a profit. but later on, they distance themselves away from trading as they lack the courage and wisdom to deal with the unpredictability and uncertainty from the trade. For dealing with the volatility in the market, you need to be cautious and wise 24 hours a day.

First of all, keep a trading plan in place. Every loss in course of trading needs to teach a lesson, which is helpful in further trading. You could note the mistakes in a journal and refer to them as and when it is necessary.

By keeping notes about every day’s happenings, you could know about productive and unproductive areas in forex trading. You would learn about the factors that influence the results in trading both major currencies and minor currencies.

NEVER FORGET TO HAVE A STOP LOSS

In general, a STOP LOSS is an instruction that stops you from losing excess money in the market when you buy or sell currencies. It is a vital part of trading, and so it is a must in your day-to-day trading activities. Without its presence, your trading certainly remains prone to risk.

So the next idea to undertake in this forex for beginners guide is you need to set a clear idea of how much money you could really bear to lose in a particular day’s trading. You need to ensure that you don’t step over the limit once you set it. Many young investors allow their emotions to rule their decisions in trading, which is a blunder. You need to stay emotionally balanced as you push through every day’s trading activities. Register for a free session for our forex trading course for beginners to know how exactly stop losses can most effectively help you in minimising your losses!