Forex For Beginners – your top 3 tools
When first considering trading forex, you may ask yourself what are the tools for forex beginners that make sense to start with?
We would suggest you need to step back even from that point and get the basics right, know which resources to trust and ‘try before you buy’ into forex trading.
Forex trading is a specialised form of trading with the ability to bring quick and sizeable profits and it offers a higher leverage than other financial markets. This means smaller movements in prices yields greater reward or risk so we need to be cautious.
The commodities traded within forex trading are the currencies of different countries, therefore the market is largely driven by global economic forces. This market behaviour can be learnt and predicted by successful individuals, simply having an understanding of how and why there is movement.
The tools in this section are not ‘trading charts or indicators’ or other more physical tools used in day to day trading, but steps that each beginner to forex trading should be taking before money is invested.
Below are the 3 top tips that efficacious traders swear by, the tools that beginners to forex trading should be using :
1: Take a Forex Trading Course
The first of our 3 tools for forex beginners you should be taking advantage of is a free forex trading course.
A Forex trading course should offer educational material that includes technical analysis of potential entry and exit signals, and factors that influence the economy of a country.
The value of foreign currency in the Forex market is very much dependant upon the product and services for sale within that country and what they specialise in. One example could be a country which specialises in exporting a certain crop; if this Country goes on to yield bad crop due to a monsoon or any other dire issue one season, this can greatly impact their economy and therefore have a large influence on local currency.
A savvy trader will do their utmost to educate themselves on the worldwide economic markets and a lot of brokers in 2020 are now providing a whole host of free educational support to fulfil traders’ needs in one place. Best broker educational offerings can be found here.
There is our own forex educational section which helps users with the fundamentals on how to trade forex and other instruments but there are some other fantastic free trading courses and resources available online.
2: Practice Trading with “Play Money”
There are apps that allow novice traders to practice in fictitious trading, also known as “Demo Trading”, using “play” money. This could prove invaluable if you want to learn the market without exposing yourself financially and is one of the essential tools for forex beginners.
We would even go so far as suggesting that even experienced traders have a need for a demo account to put in place simulations of new trading techniques or strategies from time to time.
Simulated trading with historical data can enable you as a forex beginner to gain experience, and learn trends, technical indicators and patterns on an actual platform.
The best way to hone your trading strategy and find which platform suits you best is to try the best forex demo accounts. Once you are comfortable and familiar, only then should you move to deposit funds into a real forex account.
3: Keep Up with Current Forex Market Trends
The last in our list of tools for forex beginners is staying informed on market trends. This will be something that all traders need to do if we are to stay successful but is even more important for beginners to invest time in getting a feel for the markets.
Being able to accurately predict trends and identify profitable entry and exit strategies, will put you above the rest and ensure your Forex trades, whatever their monetary values are safe.
There are many educational resources available to you to help boost your knowledge and ensure that you find success as you learn to trade forex. A starting point should always be to familiarise yourself with general forex working terms, forex history and how it has evolved.
Find a Trusted Forex News Source You Can Rely On
Find a source of information that you trust and monitor the market to ensure you are on the right side of the trade. As with all reporting with potential vested interests there can be quite a bit of misinformation going around.
There are various news sources which can be used to make your own conclusions but in most cases the simplest and most time efficient way to stay on trend is to pick a broker that has daily market analysis sent right to your inbox.
Whilst more information is usually better, for the average trader who has limited time resource we advise to stick 2 or 3 trusted sources and use those as your base – if something in particular then piques your interest, branch out and stay on topic.
This is just the very start of the tools you will need as a forex beginner but with these fundamentals you should feel more prepared than you were before we started.
We move into more detail in our ‘how to trade’ section but the next stage in our beginner journey is running through the different forex risks we encounter.
Our Top 3 Tools For Forex Beginners Summarised Simply in 3 Steps
Step 1 – Take a free forex trading course and get the basic knowledge.
Step 2 – Trade with play money or on demo accounts before you deposit.
Step 3 – Keep up with market trends and find trusted resources.