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4 Effective Tips For Beginners To Save Money In Forex Trading

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I'm also one in the beginning stage. I'm not too worried about getting caught up in emotions as to I know money is super necessary but I'm still not too materialistic. It is a bit difficult to just make a trade as I see there being a lot to go into it before starting. Also what I've argued with my girl about her not understanding it :ROFLMAO:
My first focus right now is understanding the candlesticks then I'll take it from there.
Like playing Chess. Gotta know how the pieces function before you can operate.
 
Like all other forms of trading, Forex trading is also more art than science. The successful traders are not just talented, but they practice discipline and perform self analysis to eliminate negative thoughts, emotions and keep the spirit high. For a beginner, losing money in Forex is not a good sign to start with.

Following are some tips to follow if you want to save money as a beginner.

Money Management

Survival is the most important thing in the Forex trading market. Hence, it is very much crucial not to involve in any money losing trades and make sure to stay in the market game.

Not only freshers, but many consistently unsuccessful traders concentrate exclusively on acquiring a profitable strategy. But apart from trading plans, concrete money management principle and a rational and disciplined attitude will get the beginner further at the end of the day.

Do not risk more than 3% of the capital in each trade. Make sure you possess enough capital for minimum 40 trades as a beginner.

Stop loss orders

It is one of the most vital weapons as a beginner trader in Forex market. The stop loss always permits you to analyze the risk down to the pip beforehand. Setting up a stop loss before the trade-opening, will remind you to think when the trade is going to be designated as failure. You'll be an idiot to ignore the stop loss signal and stay in the trade.

Profitable trades and losing trades ratio is vital to think which a stoploss -triggered analysis is. If you want to risk 50 pips to double of it that means you'll need minimum 33% of the time to break even. So your strategy can give you 33% profitable trade every time?

Be realistic and keep emotions under control

Everyone isn't made of Midas touch to close 80% trades profitably within 6 months. Try to visualise realistically from the starting. Fix an achievable percentage of winning trades as per your experience. After getting clear condition and trading tools, it's easier to plan and work. Trading is fun and exciting but do not get carried away. Control emotions like greed, frustration, gambling attitude and practice routine, exercise and practice in the market analysis aspects.

Interacting with other forex traders

Information is important and you can get basic knowledge and foundation from books. But practical experience and skills are something which isn’t provided in books. The feedbacks of fellow traders are handy and for that you should become a part of online Forex trading community. Don't be embarrassed to start a discussion because everyone started out as you at some point.
Malvika, this post is very instructive and educative. I am reading your post four years after you wrote it and it is still very apt. I have a question though. Some EAs do not use stop losses, what do you say about that?
 
The tips are really important for traders who are looking forward to trading forex profitably. Thanks for sharing them.
 
No matter how old this post is, the tips are still important and must be followed with due diligence. It’s great that you have got money to trade but it doesn’t mean that you must put it anywhere you want. You must be thoughtful about the moves you make. So, money management is an important skill that can do wonders for you.
 
It is important to protect the trading capital before thinking of making profits.
This can be done by:
  1. Using a strict Risk management strategy
  2. Do not use your emotions in trading
  3. Start small
  4. Avoid trading if risks are more than 2% of the trading capital
 
1 Decide how much you want to risk per trade
One of the most important money management techniques in Forex trading is the so-called risk-per-trade technique. Risk-per-trade determines how much of your trading account you’re risking on any single trade. As a rule of thumb, don’t risk more than 2-3% of your account on a trade, so you’ll have enough funds to withstand the negative impact of a series of losing days. It’s always better to risk small and grow your account steadily than to risk too much and blow your trading funds.

#2 Don’t overtrade the market
You don’t have to make a trade every single hour, or even every single day. Wait for the trade setup to form and don’t chase the market for trading opportunities. The market doesn’t owe you anything, and patience and discipline is the Holy Grail of profitable traders. Even the best Forex money management system won’t help you much if you make multiple trades without any market analysis.

#3 Cut your losses short and let your profits run
If you’ve followed international Forex tips on trading, you might have heard about the saying “Cut your losses short and let your profits run.” Professional Forex traders do just that – they’re very impatient about their losses and close a losing position early, but let their winning positions run. Beginners to the market do it the opposite way – they let their losses run, hoping they will revert, and cut their profits short on fears they'll miss out on them.

#4 Always use Stop Loss orders
Stop Loss orders are a major building block of risk and money management, and should be an integral part of any Forex money management plan. A Stop Loss order automatically closes your position when the price reaches a pre-specified level, preventing larger losses. All Forex trading money management strategies should incorporate Stop Loss orders.

#5 Chase trades with a reward-to-risk ratio of at least 1
Research by a large Forex broker has shown that traders who make trades with a reward-to-risk ratio of 1 or higher are significantly more profitable than traders who trade with a R/R ratio of below 1. The reward-to-risk ratio, or R/R, refers to the ratio between the potential profits and the potential losses of a trade. For example, if you buy GBP/USD with a Take Profit of 100 pips and a Stop Loss of 50 pips, the R/R ratio of that trade would be 2. If you only take trades with R/R ratios higher than 1, you’ll need a relatively smaller amount of winning trades to break even.
 
I do think stop loss orders are the biggest key. It is really important not just for preservation of capital but also maximising your profit as you have a static loss and a higher win rate
 
Thank you for providing such interesting info. All of these things, in my opinion, are essential for beginner traders just starting out in the industry, as they can help them avoid costly mistakes and save money. Of course, each trader must acquire his or her own experience, but it is far more beneficial to examine the experience of other traders.
 
Well written as described. Knowing the fundamentals of risk management, and money management, can help a beginner save money in forex, even if he does not perfectly know how to form good strategies.

Another helpful tip might be the usage of capital. A beginner should trade with only that much capital which he is ready to lose. The use of leverage by a beginner should be restricted till he knows how to use risk management.
 
You can’t save money in forex if you are not using it properly. You have to be careful about the trades you make and the money you put at risk. Build a risk management strategy so that you are not going beyond your risk appetite ever to make money.
 
For this, you will have to learn to use your money correctly. It’s true that your profits depend on your risks but these can be kept small if you don’t feel comfortable. See, for a beginner, it’s really tough to make any profits. So, better not waste your money and use small amounts until you have learnt well.
 
You have covered all the relevant points. Thank you for sharing these tips. Emotional trading is the biggest enemy of a trader. We should always try to be rational and make wise decisions in order to trade forex like a professional.
 
These are some of the great tips. I’d like to add more here:

First of all, you should start trading with a demo account and practice as much as you can. If you are a beginner, you shouldn’t trade with real money because you have a lot to learn and you could lose your whole account. You should learn the basics of Forex trading, how to analyze the charts, how to make strategies, how to set stops and take profits. Don’t try to trade the news because sometimes the news does not always reflect in the market immediately. The golden rule for every trader is to try to become a better trader today than you were yesterday. If you follow these steps, you will be able to save money as a beginner!
 
The good thing about forex trading is that a trader can make his own choices. He doesn’t need to follow a strict plan of action and so can decide how much to put at risk. This gives traders enough space to build their risk management strategy that can further help them in making the right use of their money.
 
I’d only suggest starting small. Don't try to trade with too much money right away. Start with a small amount of money and increase your trading size gradually as you become more comfortable and confident.
 
These can be really helpful while trading.
  1. Use stop loss order
  2. Money and risk management
  3. Keep your emotions away from your trading
  4. Keep learning and upgrading
 

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