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Ok, you already know the positives – the legendary stories of the work from home traders who are battling the markets daily and returning with huge sackfuls of pips. You aspire for the same. You know there’s a fair bit of learning to do to get there, and you’re ready to put in the effort – you are a rookie FX UK trader and you’re ready to start trading the forex.
With that in mind, here are some simple tips, hints, strategies and downright sagely advice for the FX UK trader to keep in mind as they wade boldly into the seemingly murky waters of the forex trading universe. Be brave, but be equally careful – there are sharks out there, and they’re after your trading capital – all of it!
New FX UK Traders – Some Friendly Forex Trading Tips
FX UK Trader Tip 1 – It Starts With A Practice Account That You Treat Like Your Own Capital. Want to save yourself a good kicking, a whole load of mental anguish and some money? Start off your trading career with a practice (dummy) account while you “find yourself”. There are two important caveats to this – use as much pretend capital as you intend to start trading with for real. So, if you intend to trade the markets with $5,000 of your own money when you’re ready – fund your dummy account with the same amount. The reason this is important is that your trading capital amount needs to be leveraged within your overall trading style and strategy. $5,000 of trading capital means you can enter fewer trades of the same average value than with a $50,000 trading pot. You want to simulate your trading down to a T when you’re in dummy mode! Secondly, use an FX UK broker, even for your dummy account. An FX UK broker offers you protection against loss of capital (eg if your broker goes under). If you start your dummy account with a non UK broker, you’re likely to get accustomed to their trading platform and are more likely to start trading with them using your own real capital.
FX UK Trader Tip 2 – Risk Management, Risk Management, Risk Management. The global financial crisis arguably had been set into motion as a result of epic mis-management of risk with regards to sub prime mortgages in the USA. Mortgage companies unwittingly mis-read the risks of issuing mortgages to many people who (with hindsight) really had no chance of repaying. This is a rather macro level example of what happens when risk is misinterpreted – but the principal is fundamentally the same for home based forex traders. MANAGE RISK WITH CARE! Practically, this means not parlaying more than 2% to 3% of your entire trading capital on one trade and grasping the other very basic concepts of risk – including the ability to analyse the risk versus reward ratio on every single trade you mull over.
Final FX UK Trader Tip 3 – Develop Soft & Hard Trading Skills
If trading were purely scientific, it would be impossible NOT to make money. Each and every system would work, and every expert adviser would multiply your profits over and again. Forex trading is NOT completely scientific. Good traders must develop both hard and soft skills. Hard skills are those which allow traders to pick off high probability trades through the skillful implementation and use of technical and other analysis. Hard skills take time to perfect – but with practice they can be improved, honed and used to pick out trading plays that have a high possibility of putting pips in your pocket.
Soft skills are just as important – they include mastering trading psychology – not letting the gremlins of greed and fear run amock in your head causing you to make the most shocking trading decisions. Soft skills include keeping your calm when the markets are pinging your currency pairs all over the shop. It only comes with experience – after you’ve had a few anguishing, eye poppingly tense trading encounters.
Both hard and soft trading skills take a little time to perfect. Errors will be made. Pips often must be sacrificed to earn these skills. And that rather neatly brings us full circle back to FX UK Trader Tip 1 – do you now see why you need to start off with a practice account?