For some traders, a market is a fascinating place that offers a chance to make money. For others, it’s an intimidating and chaotic jungle where only those who are prepared for battle will survive.
This article is set for beginners and professional traders whether you use the STP (Straight Through Processing), Hybrid (STP and ECN), or ECN forex (Electronic Communication Network) methods.
Table of Contents
Set Realistic Expectations
As a beginner, it’s normal to expect your forex trading to be as lucrative and easy as the success stories you’ve read online. Realistically though, most beginners take months or even years before they feel like they can make money consistently. You don’t want to get discouraged if your first few forex trades go poorly and leave you in the red.
Instead of expecting immediate returns, set realistic expectations for yourself by setting goals related to how much time and effort you want to invest in forex trading. Once those goals are met, then go back and try again!
Keep a Forex Trading Journal
The first step to advanced trading is to record your trades. Where did you buy or sell? Why did you choose this direction or method? How high or low did it go? What was the profit level?
What was the outcome in terms of money gained or lost? Did you win our money back from previous losses? Was there anything else interesting about how things went down, e.g., changing from STP trading to ECN trading?
Understand Different Markets
Forex trading involves buying and selling currencies against other currencies in an attempt to make a profit from fluctuations in price over time. This can be done through either a spot or a forward contract.
It’s important to understand the difference between these two types of contracts because they have different characteristics, which means they react differently regarding volatility and predictability.
A spot contract is where the buyer and seller agree on a price for a currency at a given point in the future. It’s essentially an agreement to exchange currencies, plus any interest or other fees agreed upon by both parties.
A forward contract is similar but different because it allows traders to lock in rates before they take effect. This means if the market moves against them, they won’t lose as much money because they already know what prices will be like in the future. Additionally, professional forex brokers can help guide you through the nuances of these contracts, helping you make better investment decisions. But with the countless number of brokers in the market, it’s important to do your research to find trusted brokers that can provide you with the best insights. Today, there are resources like TopBrokers and Forex brokers that provide a wealth of information to help you make an informed choice. So, you need to do your research in advance, to ensure you’re in good hands.
Don’t Overtrade
Over-trading can be one of the worst things that a trader does in ECN forex. This is because it increases risk exposure and reduces your chances of making money. One way to avoid this pitfall is by only placing trades on days when there are major news releases, such as interest rate decisions or GDP reports.
Another way to avoid overtrading is to trade once or twice weekly. This will allow you to set aside a few daily hours to monitor markets rather than make trades throughout the whole trading session.
