As with most things in life, your results as a Forex trader are closely correlated with your level of knowledge and experience.
However, due to the risks involved in Forex trading and the fact that you put your own hard-earned money on the line, the lack of knowledge as a Forex trader can be more detrimental.
Therefore, we thought we’d outline some of the biggest risks of not educating yourself enough before you start trading as well as solutions on how to best avoid it.
Lack of knowledge is your biggest enemy
As a Forex trader, your biggest enemy will forever remain knowledge or rather the lack of it.
Let us clarify that since the Forex market is completely random and volatile, it’s impossible to always predict what will happen. Although, with the right set of skills, a trader can learn how to best evaluate assets and unique situations and improve their trading strategies and results based on that.
Because of this, your goal should always be to get better at reading charts and predicting market movements since it’s the only true way of ever gaining leverage against the market.
Unfortunately, most traders do not look at things this way.
Novice traders are especially known for trading on gut feeling and trends, and that is a strategy that will never result in regular or stable payouts. As a matter of fact, the reason up to 85% of all recreational traders lose money when trading is because they lack the knowledge needed. It’s really as simple as that.
Our point is that Forex trading is a skill that you can master and not working on continuously improving is a fool’s game.
So, how do you get better at trading?
Well, there are several ways to do so, and we’ll highlight some of them below.
Start educating yourself today
Based on what we’ve mentioned, it should be clear that you need to start educating yourself on how to trade Forex if you haven’t already. Even if you already know the basics of how to trade, you should still strive to improve your skills further.
Now, depending on how you prefer to learn, there is a multitude of good resources available on how to trade. Up until recently, the most common and effective way was to learn books, something you should keep on doing.
That being said, nowadays, the Internet is a much greater source of Forex trading knowledge than any books, and we’ve listed some of our favorite resources below.
How To Trade Forex — BullMarketz.com
Day Trading Tips and Strategies — Investopedia.com
Trading Videos — IQ Option Video Tutorials
In addition, there is a range of online trading blogs, vlogs, guides, and courses that you could and should make use of.
Tips on how to gain experience
Besides studying trading strategies and tips, one also needs to gain experience in order to succeed.
In the past, there was only one way to do so, and that was to deposit some money and start experimenting with what you had. Luckily, things are a bit different today, and modern traders have an advantage that traders back in the days didn’t.
The advantage is called a Demo Account, also known as a trading simulator, which is a risk-free trading platform where you can trade Forex using virtual money.
By removing the risk factor, you will be able to try strategies and finetune new skills you’ve mastered without ever losing a penny. A demo account should be mandatory and something every new and experienced trader should use to their advantage.
Just be aware that humans tend to take bigger risks when there is no real money involved, and you need to be very careful when switching from demo trading to real trading so that you don’t take unnecessary risks.
Learning how to properly analyze assets and trade on opportunities is an essential skill that all Forex traders could master.
In fact, there is no reason to wait, so you could start educating yourself today. You can either pick up a Forex trading book or make use of the endless selection of useful resources online.
And remember that all knowledge is good knowledge when it comes to Forex trading which is why you should keep learning for as long as you can.