There are many reasons why people may want to trade the financial markets, from the ability to generate secondary and passive income streams to inflated leverage and the potential for disproportionate returns (especially in the forex market).
However, the same leverage in currency trading can also lead to disproportionate losses, while derivative assets such as forex remain inherently volatile and challenging for novices to navigate.
In this post, we’ll look at the main tools and strategies for traders so that you can determine whether or not forex trading is right for you.
The Main Trading Tools for Beginners
You’ll typically trade online using a licensed forex broker, which will also afford you access to viable trading platforms such as the MetaTrader 5.
The successor to the iconic and popular MT4, this platform will offer you access to a broad range of technical indicators and historic analytical tools that can help to inform your trades in real-time.
The brokerage site that you use should also serve as a one-stop-shop for education and insight, and there are a couple of particularly interesting tools that can help you to build a career as a forex trader.
Firstly, your platform should offer you access to a so-called “demo account”, which essentially simulates a real-time trading environment in which you can hone your various strategies without risking your hard-earned cash.
This is critical for beginners, who can use demo accounts to bridge the gap between theory and practical trading experience in an immersive and entirely risk-free setting.
Secondly, your trading platform will be home to a number of critical insight tools such as the economic calendar.
This plots a number of key economic news and data events through the year, while highlighting their importance and potential impact on the market.
Fortunately, you can customise such calendars to suit your targeted assets and trading strategy, becoming your most important and helpful tools during the course of a typical trading day.
The Best Strategies for Beginners
If you’re still keen on becoming a forex trader, you may be interested to see the best and most viable trading strategies available.
The first that you should consider is the ‘pin bar’ strategy, which is widely considered to be the standard-bearer for novice traders.
The reason for this is simple; as it showcases a very obvious visual pattern that’s incredibly easy to identify on a chart. It’s also relatively easy to trade, particularly when looking to identify clear breakout points following a period of resistance.
Another interesting option is the inside bar trading strategy, which is highly effective and best utilised as part of a continuation pattern.
This means that you want to utilise a pending order to trade a breakout in the direction of the major trend, creating a similarly easy trigger from which to execute orders.