If you are just beginning your trading journey and you don’t have a significant capital outlay to trade with, you should definitely think about trading in the forex market. The transaction costs that come with trading in the forex market are beginner-friendly. It also has attractive leverage opportunities and the fact that it has high liquidity makes it the perfect place to easily make a quick profit.
However, the key to making a profit, especially as a beginner lies in keeping everything simple. Here is what you should know about how simplicity will increase your odds of being a successful forex trader.
Simplified trading interface
While the forex metatrader 4 trading platform has a variety of features that allow you to use different types of charts, numerous technical indicators, various options for newsfeeds, and other advanced analysis tools, this does not mean that you have to use all of them. In fact, at any given time, there is no reason why you should be having your desktop littered with charts, newsfeeds, and other windows. This will only complicate the trading process, and in most cases, it can make the whole experience stressful.
Given the extensive customization that is possible with MetaTrader 4, there is always room to simplify your interface. You don’t need to use all the bells and whistles that come with the platform. You also don’t need to have multiple monitors with multiple windows open. Simplify your charts by having as few technical indicators as possible. Doing this will make it easier for you to process information, and it will increase your odds of taking full advantage of opportunities as soon as they present themselves.
Focusing on areas you have a clear grasp in
Your ability to make money in the forex market relies heavily on making correct bets on the future value of the currencies. As a result, making sure that you only focus on currencies whose movements you can predict will give you a better chance of making profitable trades.
Even if you do not have a good grasp of all the factors that will affect the movement of a currency pair, you can always choose one or two pairs to focus on. This simplicity in approach will make it easier for you to gather more knowledge and develop a better understanding of how to predict pricing trends.
You can also make things easier on yourself by opting to take trading positions on major currencies as these offer better opportunities for making a profit and even hedging against risk. It is also easier to gather information and carry out analysis on major currencies since getting access to data that relates to these currencies is relatively easier. As a result, you have better odds of making the right bets when dealing with major currencies, especially if you are a beginner.
Simple hedging strategies
Hedging is an easy way to minimize your exposure to risk. Given that a major part of your success when it comes to trading in the forex market will depend on you having money to trade when the right opportunity presents itself, adopting a few hedging techniques will boost your odds of making a healthy return.
As a beginner, it is always advisable to stick to basic hedging strategies. Using direct hedging is in fact recommended, since using multiple currencies to diversify your risk can end up exposing you to risks that you are not yet ready to undertake. Also, while using forex options is an affordable way to protect yourself against losses, it can also lead to you losing a lot more money simply because of the risks that come with using leverage to trade.
Therefore, focusing simple direct hedging is the best way to guarantee that your investment is protected. You can always adopt advanced strategies later on, but only after you have gained enough experience and knowledge to guarantee the safety of your investment. Until then, you should always strive to keep your trades as simple as you can.