When you first start trading forex there’s a lot to learn. You need good tools and you also need to ensure that you thoroughly understand them all. That takes time, at the same time as you’re trying to get to grips with trading itself. The best approach in these initial stages is to keep things simple and give yourself time to find your feet.
New forex traders shouldn’t be chasing big money – almost everyone who does so gets burned. instead, your focus should be on conserving your money while you learn what you’re doing and explore your options. This means that you don’t need the fastest, fanciest tools on the market. You can get a lot of tools that will serve you well at this stage without spending anything at all.
Setting up your trading station
One thing you will need to spend money on is your work station. A fast computer and reliable, fast internet are essential. It’s also worth investing in a second monitor as you will have a lot of data to keep track of. Most traders use one for reference materials and one for making trades. Make sure that you have a comfortable seat because you may be at your station for long periods of time and you also don’t want any distractions when working.
Choosing the right software
The most important thing you will need when trading is a chart to keep you up to date with the movements of currency pairs. You can get free forex charts from forextraders.com, and because they don’t have all the extra bells and whistles that many commercial ones do, they’re actually much easier to use. At this stage in your forex trading career you can easily have too much information. Keeping things simple makes it easier to focus on the details that matter. Trend lines, and support and resistance lines, are the most important things to follow. Focus on how trends are developing and be wary of making predictions that appear to contradict them.
Because forex trading is, by its nature, international, you’ll need a tool for keeping track of different time zones. Some forex tools come with this built in and there are lots of other graphical time zone converters that you can keep on your screen for easy reference. If you’re engaging in forwards or futures trading, you’ll also need a calendar.
Before you can manage risk effectively, you’ll need to be able to calculate the risk associated with each trade. For this you will need a position size calculator. This makes it simple to undertake otherwise complex calculations involving your trading station’s base currency and each currency in the pair you’re considering trading on.
A pivot point calculator can help you keep track of how your trades are developing over the course of each day. This is particularly useful when you’re a beginner because it helps you get some distance and take stock of your situation rather than being distracted by the ups and downs of individual trades, which in turn helps to take emotional bias out of the equation.
Simulation software is a great investment for a beginner because it lets you explore possibilities without taking risks. It’s more than just a tool for learning the basics, however. It can be really useful for testing new strategies to see how they play out. Many seasoned traders hold onto it so that they can explore new ideas.
Can you trade from your mobile?
A common question asked by beginners is whether or not it’s possible to trade from your mobile. It’s true that there is software available for this but it’s not a good idea because it’s simply not possible to keep track of all the information you need on a small screen. Your mobile is, nevertheless, an invaluable tool. It can give you the flexibility you need to push a trade through if your computer or internet jams up. It also means you can communicate with fellow traders, including any you’re pooling funds with, at the same time as you trade – improving your situational awareness. Get a hands-free set or one with a good speaker and microphone so that you can easily use it when your hands are busy with the keyboard or mouse.
Having the right tools will put you in a much better position to make a success of forex trading. Take the time to work out the trading style that suits you best and bring in further tools as necessary to complement it. Trading is all about focus and streamlining what you do.