Trading forex sounds like a much more enjoyable and fulfilling way to make money instead of a 40-hour work week. A common reason why a lot of people gravitate towards Forex trading, or trading any other financial asset for that matter, is the ability to travel. That being said, most people end up getting glued to their computer screens for hours on end anyway. They often reason out that it’s a part of their day-trading strategy or that leaving open positions unchecked is nerve-racking and bound to lead to large financial losses.
As many experienced and successful Forex traders can attest to, it’s indeed possible to trade while enjoying the splendors of traveling. This beginners guide to forex trading will walk you through the steps needed to successfully trade the trillion dollar market of foreign exchange all while eating breakfast at a countryside B&B or taking a long bus or train ride to a remote town.
Advantages of Forex Trading
Before we dive into how to trade forex for beginners, let’s first discuss some major advantages to it. Round the clock access to the Forex market is one of the main reasons why traders choose foreign exchange instead of stocks or bonds, both of which close in the afternoon. As a forex trader, you have 24 hours, 5 days a week to open and close trades and, ultimately, make some cash. The more time that a market is open, the more price action there is to exploit and make money off of.
Another advantage to trading forex and other financial markets is that it is convenient. Thanks to the unprecedented leaps in financial technology, people now have tools to easily open and close trades at their whim. No more having to wait three to five business days to get your orders filled or having to wait for your local newspaper to get updated on an asset’s price.
Mobile trading apps and desktop trading software are armed to the teeth with features that make it effortless to stay up-to-date with current market news and price action.
If you’re traveling, then you’ll want to have a laptop or smartphone that can bridge you with your chosen broker. Desktop computers are great and reliable, but they’re simply too bulky and have too many parts and cables to bring with you on your travels.
Use a laptop that has good battery life and reliable internet connection. These two things should be the key factors to take into consideration when looking for a laptop online or in-store. The same two factors apply for choosing a smartphone to trade with.
In terms of the trading software itself, brokers will provide you with a trading platform that is compatible with most popular devices including Android and Apple phones. The great thing about mobile trading is that it is completely secure, all while giving you on-demand access to market data including price charts, news reports, and expert analyses.
Your broker plays a significant role in your year-end bottomline. A good broker should be able to process your orders and transactions without any noticeable latency. In Forex, especially during volatile times such as when high-impact news is about to be released, currency prices can move a significant amount in a short period of time. Even a split second delay in processing an order can lead to huge missed gains or more losses.
VPS hosting is another piece of trading software that will prove useful to a trading nomads and remote workers. With a virtual private server, you gain more control over your device, whether it’s a desktop or a smartphone. A more relevant reason, however, is that it helps you overcome common technical issues, such as power or internet interruptions. A virtual private server allows for activities to proceed even when these technical issues occur.
The ability to avoid latency and maintain connection to their broker platform can prove beneficial for forex traders who travel frequently. With a VPS, traders can execute their trading strategy in an environment that is specifically designed for maximum uptime.
Choose a Trading Strategy
Arguably 50 percent of your trading performance is connected to the specific trading strategy you choose. As a remote worker, you have the advantage of meeting fellow traders and investors on the road and picking up nuggets of wisdom and bits of their strategy, which you can recycle and reuse. As you develop as a Forex trader, you will probably find one or two strategies that fit you like a glove. They will become second-nature to you: You will make them your own.
Broadly speaking, there are three main Forex trading strategies: namely Technical Analysis, Fundamental Analysis, and Price Action. Trading using Technical Analysis means that you will be looking at lots of charts. Technical analysts believe that the chart of price action gives indications of when supply and demand points are reached and when a particular currency pair is undervalued or overvalued. The chart determines entry and exit for any given trade.
On the other hand, Fundamental Analysis looks at the big picture. Traders utilizing a fundamental approach are likely to look at economic, geopolitical and business trends for specific nations or trading theaters and enter trades accordingly. Still different is trading using Price Action: Here the trader simply looks at the price. Is is going up or down. The trader hops on the trend and gets out of the trade when the price direction alos down or changes. It is also known as Momentum Trading.
As mentioned, you will develop your own method, one of these three or a hybrid of two or three. Your preferred strategy will be a function of your risk profile, desired profit targets, and preferred length of each trade. Most importantly, it will fit you from a psychological perspective. You will become smoothly adept and profitable at your preferred trading method.
How to trade forex successfully for beginners takes time to figure out. There is no one linear path to success nor is there a “Holy Grail” system that will lead to bottomless profits. Just as how you’d approach traveling, whether it’s go with the flow or plan and prepare meticulously, make sure to follow a system that complements your style.