3 Things Every New Trader Needs to Know About the Forex Market – Guest Editorial

AxiTrader

Van Tharp, a world-renowned trading coach and best-selling author of trading books, is a big proponent of trading multiple trading systems to smooth your overall equity curve, the team at AxiTrader highlights when looking at education in FX

The management team at AxiTrader look at how knowledge is key to the retail FX market.

You no doubt already know the Forex markets provide you with 24-hour access to trading opportunities at a level of liquidity unrivalled in other markets. Today we’re going to look at three key things you can do to build your confidence in trading Forex, scale up and do it in a risk-averse, calculated way. Let’s jump straight into it…

  • Forex is the best market to practice your live trading skills

Professional traders practice their trading on a regular basis. This is one of the first lessons aspiring traders need to learn from the professionals. And to practice your skills you need frequency.

Consider two football teams both looking to improve their ability to get a goal from a corner. If Team A practices their corners 100 times per week and Team B only practices ten times, the strong likelihood is Team A will convert more opportunities.

The beauty of the Forex markets in respect to practice is twofold:

  • The liquidity at shorter timeframes
  • The ability to test your live system using micro trade sizes

Let’s say you’re looking to test and hone your skills using an end of day technical entry setup.

You can dial down your timeframe to a 5-minute chart and test your entry criteria and speed to execute across 100 entries in a short space of time, relative to using end of day charts. And, given the low transaction costs and access to micro trade sizes, you can test your skills in a live environment using small position sizes.

This ‘keeps it real’ so that  even if you end up with a losing system your downside is relatively small.

  • You can start small and scale up

The Forex markets are ideal for being able to start small, build your confidence, then scale up.

Imagine having absolute confidence that your micro trading across 30-50+ trades generated a steadily rising equity curve. How confident would you be in trading your system with a scaled-up amount of risk?  For example, instead of risking $20 per micro trade, you risk 1% of a $20,000 account – equivalent to $200 per trade.

This is the true beauty of the Forex markets. Once you build your Forex trading system with an edge in real-time, you can then start to scale up to a risk amount that fits your profile. You can then rinse and repeat this process for each new Forex trading system you have across any time frame.

Van Tharp, a world-renowned trading coach and best-selling author of trading books, is a big proponent of trading multiple trading systems to smooth your overall equity curve. So if your trending system goes into drawdown your range-bound or breakout trading system starts kicking into higher gear.

Your goal is to start small, build your confidence in several trading systems with an edge by trading them in real-time and then scale up as your risk profile allows.

  • You control your initial risk on each trade

All Forex trading carries some risk, but it’s important to remember that you control the level of risk allocated to each trade.

As mentioned above, professional traders test their new trading systems on a relatively small amount of initial risk, so  you’ll benefit greatly by copying this idea. Once you’re comfortable with what you’re doing you’ll naturally build confidence around your systems and be able to scale up your risk in a calculated manner.

For example, on the face of it 400 to 1 leverage is  a high amount of risk, but your focus should be on how much you risk on each open position relative to your account size. The fact is you control the amount of leverage you want to apply and can keep it at 0.25%, 0.5%, 0.75%, 1% or even 2% risk per trade.

Smart traders focus on the process of building risk-averse trading systems, and you can do that too. By trading your systems in a risk-averse manner, with a focus on allocating a small percentage of risk per trade, you know you can handle any relative drawdown. Your testing should show this in real-time, with real capital at stake.

Hopefully, you can use these three key ideas to build a scalable side income in the Forex markets.

Find out more about AxiTrader here

The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.

Read this next

Digital Assets

BlockDAG’s Presale Achieves $9.9M: Aiming For A 5000-Fold ROI As Cardano’s Price Rises And Fantom Launches Sonic

Explore Cardano’s surge, Sonic’s efficiency, and why BlockDAG’s growth makes it the top crypto choice. A deep dive into the future of blockchain investments.

Digital Assets

US, UK probe $20 billion Tether transfers tied to Russian exchange.

U.S. and UK authorities are investigating the movement of $20 billion in the USD-pegged stablecoin tether (USDT) through Moscow-based exchange Garantex.

Digital Assets

BlockDAG Presale Raises $9.9M as Batch 5 Nears Sell-Out Amid Bonk’s Fluctuating Trading Volume & Spell’s Bullish Price

Explore BONK’s trading volume, SPELL’s market shifts, and why BlockDAG’s 10,000 ROI makes it an ideal crypto for savvy investors in 2024.

Digital Assets

Bybit expands into Europe amid regulatory scrutiny

Dubai-based cryptocurrency exchange Bybit is expanding its operations in Europe after encountering regulatory challenges in Hong Kong.

Digital Assets

Cathie Wood’s sponsored Bitcoin ETF sees historic $200 million inflows

The ARK 21Shares Bitcoin ETF (ARKB), co-sponsored by Cathie Wood’s ARK Invest, registered historic inflows exceeding $200 million on Wednesday, signaling a robust appetite among investors for Bitcoin-centric investments.

Digital Assets

Sam Bankman-Fried might see his 25-year sentence halved

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.

Technical Analysis

EURJPY Technical Analysis Report 28 March, 2024

EURJPY currency pair under the bearish pressure after the pair reversed down from the major resistance level 164.25, which also stopped the sharp weekly uptrend at the end of last year,

Digital Assets

BlockDAG’s Presale Hits $9.9M, MultiversX & MINA Price Predictions Show Green

Read about BlockDAG’s promising $10 prediction and insights on MultiversX Price Prediction as MINA’s potential unfolds.

Digital Assets

Rockstar Co-Founder and All-star Line Up Join Advisory Board to Take Metacade into Post Beta Orbit

Metacade, the revolutionary Web3 gaming platform, prepares to streak out of beta with a slew of ground-breaking initiatives that will redefine the way blockchain games are developed.

<