Welcome to the third part of the Ultimate Guide. This part will cover up the rest of the essential topics for beginner traders, and give you a reference point for a more detailed study.
Main article sections
- Mastering trading psychology
- How to analyse the Forex market
- Popular forex strategies
- Trading tips for beginners
Mastering trading psychology
It is not only a broad background and ability to analyze the market that can make you a good trader. Have you ever noticed how successful people behave? They never lose temper and always think twice before acting. The comprehension of trading psychology is a thing that can improve your game. Wondering, how to stay cool under pressure, enter or exit trades before the market turns whether you are cutting losses or taking profits? Develop your own trading discipline based on MTrading advice.
- Set realistic trading goals. It's important to have a realistic estimation of potential profits and losses. As your performance grows, so should grow your expectations.
- Consider your risk tolerance in advance, then choose trading strategies fitting the estimation. A low-risk tolerance is suitable for lots of small trades, whereas higher tolerance for risk would better suit larger trades, with the opportunities for larger gains.
- Mind your limits: define the target, close at it and enjoy benefits or fix losses.
- Get ready for the worst. It sounds pessimistic, but by considering the worst possible outcome of a trade, you can take measures to protect yourself, should this happen, such as by setting a stop loss in advance.
- It is the overall performance that counts: You may be tempted to take a higher risk while experiencing smooth trading or put your shirt on in case of repeating failures. Do a favour to yourself - stay calm.
How to analyse the Forex market
Although sometimes rookies count on cards and experience the beginner's luck, it rarely lasts. Tech-savvy traders will tell you: the market analysis is absolutely vital to both short-term and long-term trading. Daily, weekly, and monthly charts should always be at your hand. There are various approaches to Forex analysis, however, three broad categories remain the most widely used:
This type of analysis is for monitoring real-world events that may have an impact on the value of the financial instruments you are going to trade. For instance, the value of the American Dollar might fluctuate following a Retail Sales Report, which will then affect the movements of all currency pairs that include USD. These economic indicators have the greatest impact on the Forex market:
- Gross domestic product (GDP)
- The number of jobs outside the agricultural sector (NFP)
- The Unemployment rate
- The index of industrial production
- Retail sales
- Orders for durable goods
- The interest rates of national banks (like the European Central Bank or the US Federal Reserve)
As soon as the economic publication or announcement appears, there are three possible scenarios following:
- No reaction (the market had anticipated the announcement)
- A strong movement in accordance with the economic data that has been made public (positive news may lead to the asset's value increase)
- A strong movement against the economic data shared
The challenge is predicting the most likely outcome and opening a trade accordingly. The right trading approach implies both the news inspection (see our Forex Calendar) and monitoring the impact such news had on similar assets/instruments in the past.