FX Online Trading - 5 Important Tips You Must Know Before Get Started in Your Forex Online Trading

 By Aaron Tan Wei Ming

Before you can actually get started in your Forex Online Trading, you're bound to have a lot of questions on your mind such as:

- How do I find a reliable forex broker?
- How do I practice on a demo account?
- What are the critical things I need to know before my first live trade..?

And so on..

The fact is that - Getting started in FX online trading is very easy for anyone who has the capital to start an account. But the more critical factor is: " How to get started the Correct Way in order to avoid losing the account in just a few months..! "

It has been shown statistically that 90% of traders will end up losing their account within the first 6 months. So here in this article, I will be sharing 5 critical elements you must know before getting started in your FX online trading without having to fall into those common traps!

I will list the elements in order of importance below.

1) Choosing A Forex Broker That You Are Comfortable With

Choosing a broker can be considered a very individual thing. One broker can be good for the other trader but it might not be good for you perhaps. One thing for sure, if you are not comfortable depositing the money with a foreign broker, then it is rightful that you go for a local one. Do make sure you read more reviews, feed backs and even post questions on related forums to gain more insight of a particular broker before you decide to open an account with them. End of the day, you just want to trade without having to worry unnecessarily which could affect your trading decision in a negative way.

2) Opening A Demo Account With The Broker You Like

Once you decide on the broker that you would want to trade with, do ahead and download a free version of their demo account. With a demo account, you are literally trading with virtual money and it is a really good way to explore the features of the trading platform... As well as get comfortable with the execution of the buy/ sell orders, setting a stop-loss and manually closing the trades when you desire.

3) Start Learning About Forex Trading Strategies

As you might already know that forex is very lucrative because it is volatile enough for us to grab some nice profits out of the market every single day. In such a volatile market where the price swing between 100 - 400 pips daily, You definitely need to follow certain proven forex trading strategies for your entry and exit. Or else You are merely shooting blindly in the dark and trading based on wild guesses. A big " No " indeed and defnitely a WRONG way to trade the forex market. Forum such as the Babypips.com is a very good place to learn proven forex strategies if you need to get started.

Try to avoid those forex strategies that rely too heavily on technical indicators as they are lagging and not accurate most of the time. But rather, go for forex strategies which are based on Forex Price Action instead because it is much more accurate and not lagging. Having found a few that you wish to test out, go ahead and try them in the demo account to see if it suits your trading style. This is important as different personality would produce different results even when both traders are using the same forex strategy. Find one that you are comfortable with and suit your trading schedule.

4) Always Trade With Good Risk/Reward Ratio Of At Least 1: 1

What does this means here? Basically it means every time you win...you win 30 pips ( an example ) And every time you lose...you lose 30 pips ( nothing less ) Combined with a forex strategy with at least 60% success rate.. You will be making profits end of the month consistently. As you get better with your trading skills, aim for a better Risk/Reward ratio such as 1: 2 or even higher. In this way, you will be making even more profits consistently in the long run - Proven!

5) Do Not Trade Based On Emotions Or Gamble Your Way Through

One fatal mistake that kill so many traders is that they are allowing themselves to trade based on emotions or presumptions. That means: - They Think the price is low now.... - They Think it should go up next and so they choose to buy it.

Well....nobody can decide what the market is going to do next unless it has shown some " sign " about it. So trading based on emotions / presumptions would only lead to more frustrated problems in the long run. You should avoid it at all cost. Lastly, trading is definitely not a gambling game. If you venture into this Forex business with a gambling mindset without having a set of proven strategies to guide you.. Then you are in for a bad time ahead!

Aaron Tan is a full time forex trader working from home. Ever since he started trading using Forex Price Action, he became very successful and even managed to quit his day job to trade full time and making a nice income every month. In his blog about Forex Trading Strategies, he will be sharing with you how he achieve that in the simplest way possible. Visit his forex blog here: http://www.forextradingempire.com Article Source: http://EzineArticles.com/?expert=Aaron_Tan_Wei_Ming