In this article, we’ll give 5 forex trader tips for beginner traders that will help you become profitable trader. Trading forex is a great way to make a side income or even a full-time income.
As you may know, the forex market is the largest financial market in the world. Learning how to trade forex is a very lucrative skill that you can learn. There are over 5 trillion US dollars traded every single day on the forex market. This means that the market has high liquidity and high volume. There are a lot of other advantages of trading forex.
Now, let’s get into talking about the 5 tips that will help you to become a profitable trader.
Tip 1: Trade Using the Breakout Method
The breakout method is a very powerful strategy for trading. To use the break-out method you need to study different chart patterns from triangle patterns to pennants. For example, the image on the right shows three different triangle patterns.
There are 3 different triangle patterns. They are symmetrical triangles, ascending triangles, and descending triangles patterns as shown in the image above. The triangle patterns are usually continuation patterns but not always. To trade with triangle patterns you wait for the breakout to happen and trade in that direction.
There are several other chart patterns that we will not talk about in this article. If you are interested in learning about other candlestick patterns make sure to check out our trading guide.
Tip 2: Test Your Strategies Using a Demo Account
Demo accounts are very valuable for a trader. With a demo account, you don’t have to invest real money to test your strategy. If you are a beginner trader you should trade using a demo account for at least 3 months before you start investing real money in forex trading.
Almost all the forex brokers out there will provide you with a demo account. But, we don’t recommend you to go with any broker you find. You have to choose the right broker that suits you. Some brokers don’t operate in certain countries. For example, if you are a trader in the US you are only allowed to use US-based forex brokers. If you want to learn more about how to find the right broker for you, make sure to check out this article.
After you choose the right broker you can open a demo trading account. If interested in learning about 3 great strategies to test on your demo account, check out this article. In the article, we go over 3 powerful strategies that you can use to make profits in the forex market.
Tip 3: Learn to Control Your Emotions
Mindset is key if you want to become a very successful trader. Having the proper mindset will give you the ability to control your emotions. By learning to control your emotions you will be able to follow your trading strategy and trading rules properly.
We will give you some tips to help you control your emotions and be more self-disciplined. First, it is important for you to set your own rules for trading and follow them. You need to set your rules based on your trading strategy and your trading style.
Also, choose what type of trader you want to be, a scalper, day trader, swing trader, or position trader. We personally recommend you to swing trade. That means you would hold your trades for 2 – 4 days. This trading style doesn’t require you to stay glued to the screen. You can become a swing trader trading an hour a day. This will help you to be more focused and more disciplined. If you don’t have an hour a day to commit to trading you should not start trading in the first place.
We recommend you break down your trading sessions into two 30-minute sessions, ideally in the morning and in the evening. This way you will be checking the markets twice a day. Also, you will be doing this 5 days a week since the market is closed on the weekends.
Tip 4: Learn about Candlestick Patterns
Learning about candlestick patterns is one of the most important skills for a trader. Certain candlestick patterns allow you to predict the direction of the market.
There are 100s of different candlestick patterns out there but we don’t use all of them. Only a few patterns are powerful patterns that predict the market correctly.
Two of our favorite candlestick patterns are the bullish engulfing pattern and the bearish engulfing pattern. These candlestick patterns are called double candlesticks. For the engulfing pattern, the second candlestick should engulf the first candlestick.
The diagram to the right shows the bullish and bearish engulfing pattern. As you can see, for the bearish engulfing pattern the first candlestick is green and the second candlestick is red. For the bullish engulfing pattern the second candle must be green and the first candle must be red
Bullish and bearish engulfing patterns are great reversal patterns. If they appear in the market, you can expect the market to change its direction. If you are interested in further learning about how to trade with the bullish and bearish engulfing pattern make sure to check out this article.
Bullish and bearish engulfing patterns are not the only candlestick patterns we use. There are plenty of other candlestick patterns that are powerful. We go over all of the powerful candlestick patterns in our trading guide, so make sure to get it.
Final Thoughts
Utilize these 5 tips if you want to become a very successful trader. If you learn how to make profits with forex trading you will be able to make money from anywhere in the world. It is indeed a great way to make some side income or even a full-time income. If you are further interested in learning more about forex trading we recommend you to check out this guide on how to start forex trading as a beginner.
