From its basic structure, forex trading is simple, since you only speculate on the rise or fall of a foreign exchange rate. Nevertheless, there are, for example, numerous technical terms that you will be confronted with on a daily basis while trading, the meaning of which you should know. These terms are quick to learn, but of course forex trading consists of many more activities and background information. For example, one rule is that you should first inform yourself extensively and, above all, try out and know strategies in exness fx before you actually place your first trading order. Therefore, you should familiarize yourself with the following situations and mechanisms, for example:
- Application of trading strategies
- recognition of trading signals
- Making the best use of the tools and information on the trading platform
- know the impact of chart movements
- analyzing your own trading
- Use money management and risk management
Do not start with exotic currencies
As in any trading field, beginners in Forex trading need to gain experience first in order to optimize their own trading activities. Therefore, almost all experts agree that novices should never start with so-called exotic currencies. The main reason is that the risk of rapid price movements and thus the unpredictability of the forex rate is significantly higher than with standard currencies. Therefore, an important rule in Forex trading is to start trading standard currencies first, which include the following five in particular:
- Euro - EUR
- US dollar - USD
- British pound - GBP
- Swiss Franc - CHF
- Japanese yen - JPY
In addition, there are numerous currency pairs that are also not yet counted among the exotic currencies and are a kind of middle ground between standard currencies and exotic currencies. These are, for example, Danish, Swedish and Norwegian crowns, Russian rubles and some currencies from the Asian region.
Don't sell hastily in case of temporary losses
A very important rule that applies not only to Forex trading, but also, for example, to trading binary options, CFDs, stocks or other securities, is not to panic and close the open position too quickly in case of temporary losses. The only exception is if you have chosen a financial product that has a maturity date, such as warrants or futures. However, in forex trading, interim losses caused by unwanted price changes should be "sat out" to a certain extent. Often traders panic too quickly, close out the open position and then get angry about the fact that it was actually only a temporary negative price development and perhaps a profit would have been made a few hours later. This brings us to another rule, which is to use the loss-hedging methods available at the Forex broker.