20 Best Forex Trading Tips & Tricks for Beginners

Understanding forex trading tips and tricks as a beginner will increase your chances of making more profit and less losses as a trader. Remember, forex trading is not a get-rich-quick scheme, but applying these tips and tricks will get you closer to profits faster. At WR Trading, we have analyzed the 20 best forex trading tips that can serve as your foundation for smart and profitable trading.

Here are our 20 best Forex Trading Tips and Tricks for Beginners

#1 Start Trading with a Forex Demo Account

One of the mistakes beginners make is not starting with a demo account but diving straight into the market with real money. Demo accounts, or practice trading accounts, are risk-free accounts that offer a simulated market environment. A Forex demo account aims to give you the experience of real market trading without financial risks. 

The difference between demo and live accounts is that demo accounts require virtual currency, so you cannot win real money. However, you can practice many trading strategies with demo accounts in real market conditions. Here, you can learn the trading basics and understand the market dynamics. With this account, you’re building your trading confidence, making your transition into live market trading easier. 

#2 Learn About Forex Markets and their Characteristics

You cannot become a successful trader without learning about the Forex market and its components. As a beginner, you must educate yourself on the art of trading (buying, exchanging, and speculating) currencies. Since the forex market is an OTC (over-the-counter), the trading happens without a single centralized exchange. 

Forex also allows currency conversion, and in the global foreign exchange market, the traded currency pairs consist of two different currencies. The currency pair is the exchange rate between two currencies, and it shows how much of the currency you need to purchase in a unit of the base currency. There are three categories of currency pairs, and they are:

• The Majors: These are the most frequently traded currency pairs, all containing the USD on one side. The USD is the most liquid currency pair, offering traders more trading opportunities. The most listed majors include USD/JPY, USD/CHF, GBP/USD, and EUR/USD.
• The Crosses or Minors: Although the crosses are not as traded as the majors, they also provide many trading opportunities because of their liquidity. However, the crosses do not relate to the USD on the side. These currency pairs include AUD/CAD, EUR/GBP, AUD/NZD, and EUR/JPY.
• The Exotic: These currency pairs have only one major currency and one exotic currency from an emerging market. In short, one currency is popular while the other is rare. Examples of exotic currency pairs include CNH/JPY, USD/ZAR, and USD/BRL.

It’s important to understand these currency pairs because they affect the market’s liquidity and volatility. The market’s liquidity describes how interested other traders are in the pair, affecting how fast an asset is bought and sold and at stable prices. On the other hand, volatility describes the stability of a currency or asset. 

#3 Learn the Basics of Forex Order Execution

Order execution involves buying or selling a forex pair or an asset. Understanding the basis of forex order execution will let you know when to enter or leave a market. It is a useful trading tip for traders who want to keep track of their losses and profits. The procedure of executing a trader’s order includes:

• Place a buy order for an asset or instrument at a specific price
• Another trader places a sell order for that asset to form a glass based on the trader’s offers, and then liquidity providers make their price offers
• The sell and buy order then overlaps depending on whether the bid and ask prices are the same 
• If the trader’s orders are not the same, the bid remains in the glass until there is a new price offer that a trader agrees to
• However, if the liquidity provider does not execute the trader’s order, another liquidity provider will pick up the order

Order execution can occur when the trader’s conditions are met or executed immediately, depending on the type of order. The following are the types of Forex orders:

Market Orders

Market orders are orders to open a position (buy and sell) at the best price available. After filling in the details of your order, you can immediately meet other conditions. This is a popular type of forex order execution because it is also used in high-frequency trading. 

Limit Orders

For limit orders, you place orders to buy below or sell above the market at a particular price. It is an order that buys or sells once the market reaches the predetermined price you entered. You can only place a limit order above the bid price when selling and below the asking price when buying. 

Stop Orders

Stop orders are placed to close a position when an asset reaches a particular trigger price. When you choose a buy-stop or sell-stop order, you must include the price and volume to protect your profits. 

#4 Create a Trading Plan for Your Forex Trades

Another standard helpful forex trading tip for beginners is to create and stick to a trading plan. Most beginners are eager to start the trading journey that they set out without a clear strategy. The trading plan will help you manage risks and make informed trading decisions. Think of them as rules you follow when you start trading. The following are some of the components of a winning trading plan: 

• Define your trading goals, both long-term and short-term
• Know your trading style, like scalping, day trading, or position trading
• Have a risk management plan
• Have a record of your trading activity like entry and exit points
• Develop a strategy to approach the market
• Continuously educate yourself on new trading strategies 

#5 Research About Forex News

As a forex trader, knowing how global events and news influence the market can make your trading journey successful. Since events happening worldwide can affect exchange rates and currency values, staying updated with financial, economic, and political developments can help you anticipate market movements and make informed decisions.  

Several economic factors have the most significant impact on currency markets, and they are:

• Central bank policy, like when the bank increases the interest rates in the country, leading to an influx of foreign investors looking for better investment yields
• Macroeconomic data like inflation, gross domestic product, and employment figures also give insights into a country’s economy. When there is good economic performance, the demand for the country’s currency increases, and vice versa
• Trade wars can also influence volatility and shifts in a currency’s value. The uncertainty surrounding countries’ growth in the war often negatively impacts their currencies

#6 Learn Forex from Professionals like WR Trading

Trading the forex market can be challenging for a beginner without the right guidance and tools, hence the need for a mentor like WR Trading. WR Trading provides a structured learning process to give you real-world insight into the trading market. We help you avoid costly mistakes by teaching you trading strategies, how to navigate the global market, and the right ways to implement them. 

The training program at WR Trading comes in three complete modules. In the first module, you will learn the basics of trading, how to find trades with high-risk rewards, and how to track your progress. Here, you will learn how to analyze charts without trading to shape your mind. 

With the second module, WR Trading will help you transition to a live trading account. Here, you will apply WR Trading strategies to the market and track your progress. You will also get a positive demo account performance in 2 to 3 months. WR Trading will also aid your connection with other traders so you can discuss your results in the main webinars. 

In the third module, you will use advanced techniques to improve your trading with WR Trading live webinars. Here, you learn methods that will make you a consistently profitable trader. 

#7 Do Not Trade During News Releases

Laying too much emphasis on trading based on the next major economic event can lead to loss as there is a risk of high price volatility. Most major news events also cause liquidity providers to increase spreads, triggering premature stop-loss. Volatility also affects slippage, where traders execute their orders at a different price than expected, leading to unexpected losses. 

Trading during news releases can also lead to whipsaw. Whipsaw is a sharp increase or decrease in the price of an asset against the current trend. As a beginner, spotting a whipsaw might seem like a challenge; however, it is not. You can identify a whipsaw effect by analyzing it before opening a position. With the analysis, you can tell when an asset is currently overbought or oversold. 

#8 Start with Small Amounts of Money

As a beginner, starting trading with small money and positions is advisable. It will help you know how to manage your expectations and reduce the risk of losing all your money. When managing your expectations, you get to set realistic goals, as your primary focus as a beginner trader is to learn and understand the mechanics of trading market trends. The following are some of the benefits of gaining experience without high financial risk:

• Trading with small money will allow the trader to trade with several strategies without risking massive amounts of cash
• Making small trades to earn profits can naturally boost your confidence and accelerate your learning curve
• With small-scale trading, traders can easily adjust their strategies without the pressure of significant financial loss

#9 Choose a Cheap and Trustworthy Forex Broker

Choosing a forex broker can make or mar your trading experience in several ways, which is why it is one of the most essential tips. At WR Trading, we recommend that you choose a cheap broker that offers some of the features below:

• Regulatory compliance
• Customer service
• Deposits and withdrawals
• Educational resources
• Solid trading platforms
• Fast execution of trades

Recommended brokers with the best features are:

• FP Markets: FP Markets is famous for charging low forex fees and tight spreads starting at 0.0 pips. They also have fast trade execution, making them one of the best choices for beginner and seasoned traders.
• Vantage Markets: Vantage Markets has an intuitive and user-friendly platform, with commissions as low as $0, depending on the account type. It is perfect for both beginners and experienced traders.
• BlackBull Markets: BlackBull Markets offers institutional-grade trading conditions with solid security measures. It also provides traders with educational tools, making it a perfect fit for both beginners and seasoned traders.

#10 Do Not Listen to Fake Online Forex Gurus

Beware of fake online forex gurus making fake promises. Most of these gurus are scammers looking to prey on beginners. They often specialize in educational content like live seminars, trading signal services, and online trading courses. Knowing how to distinguish between genuine experts and fraudsters is important to protect your funds. Some red flags you can look out for are:

• Scammers are always promising guaranteed high returns on your investment with low risk. They tend to downplay the risks of trading so you can make hasty decisions
• The scammers also lack transparency as they always rely on success claims without showing actual verifiable trading records
• Most fake online forex gurus often have poor or no customer support. You’d notice that their emails, call lines, or physical locations are fake
• A fake guru often operates without a registered license or affiliations with respectable financial institutions

There are also ways to identify genuine trading experts, and they are:

• Look out for their regulatory compliance and ensure a respectable financial institution regulates them.
• They often have good educational resources where they teach trading skills and do not sell a get-rich-quick idea. 
• A genuine trading expert will also expose traders to the risks associated with trading and share their losses.

#11 Do Not Be Afraid of Losses, It’s Part of the Game

As a beginner, it is essential to know that there will be wins and losses in forex. But always view your losses as a learning curve where you know your mistakes and how to improve to avoid them. You can recover from your losses by having a positive mindset and revisiting your previous plans. Some of the ways to reduce your losses include:

• Evaluating your risk management strategies, like using stops and limits
• Diversifying your trades to reduce your dependence on one trade
• Always have a recovery plan to regain your losses over time

#12 Use Proper Risk Management in Forex

Another trading tip is knowing what works best for you regarding risk management. The most important stages to minimizing your trading risks are identifying risks, analyzing risks, finding solutions to reduce risks, and managing and applying those solutions when trading. You can also set risk-reward ratios to protect your capital. It is a measure of the potential profit of a trade compared to the potential loss of that trade. 

Setting a risk-reward ratio will help you not take excessive risk and define how much you will lose on a trade. You can also diversify your trades to reduce your chances of experiencing huge losses. When you diversify, you spread your portfolio across many types of assets and companies. It will increase your risk-adjusted returns and preserve your capital. 

#13 Stick to Strict Money Management

When trading, a strict money management system is crucial to preserve capital and maximize profits. It involves employing rules to manage and grow funds in a volatile market. Good money management involves using stop losses and profit targets, setting risk-reward ratios, determining a good position size, and keeping a record of your trades.

For example, a trader might decide to risk only 1% of their trading account on any single trade. If their account balance is $10,000, this means they would risk a maximum of $100 on a trade. They could set a risk-reward ratio of 1:3, aiming to earn $300 for every $100 risked. 

Using tools like stop-loss orders, they can cap their losses at $100 if the trade moves against them, while take-profit orders help secure their $300 target if the trade performs as expected. This disciplined approach ensures capital is preserved while allowing room for growth.

#14 Avoid Overleveraging 

Overleveraging occurs when traders use more leverage than they can realistically afford to maximize profits. Although leveraging on its own helps traders control larger market positions with small funds, overleveraging can lead to a trader losing all their funds. You can avoid overleveraging by setting a realistic trading plan and not using more than 2% of your trading account for each trade. 

For example, a leverage ratio of 1:500 means that for every $1 in your trading account, you can control a trading position worth $500 in the market. With just $10 in your account, you could manage a position size of $5,000.

See our article about Forex leverage here.

#15 Do Not Trust Forex Trading Signals and Robots: It’s Mostly a Scam

As a beginner, do not take forex trading signals or use robots, as they are most likely scams. Contrary to popular opinion, trading with signals and robots is less effective than conducting a personal analysis. Due to the market’s volatility, forex trading bots are not a great way to make long-term profits. However, developing personal analysis skills will let you study the market trends and dynamics to make informed trading decisions.  

 #16 Choose a Professional Software Like MetaTrader or TradingView

The trading world keeps evolving, and new trading softwares are popping up. MetaTrader and TradingView, a major industry standard, offer professional trading analysis and strategy development tools. The following are some of the features that make them the ideal professional software for trading:

• A wide range of tradable assets like stocks, futures, and cryptocurrencies
• User-friendly interface and good customer relationship management
• Customizable trading indicators to suit many trading preferences
• A good backtesting capability 
• Compatibility with mobile devices, desktops, and the web for trading anywhere at any time

#17 Learn or Develop Forex Trading Strategies

Learn or develop a personalized trading strategy because every trader has unique trading goals, styles, and risk tolerance. Some examples of popular strategies are swing, day trading, position, and scalping trading. Always adopt a plan tailored to improve your chances of a successful trade.

A personalized trading strategy is important to become a successful trader. It serves as a foundation for long-term financial success. 

#18 Be Aware of All Forex Trading Costs

When trading, beware of trading costs like:

• Spreads: This signifies the difference between the bid price and the ask price for a currency pair
• Commission fees: Brokers charge a commission on trades instead or in addition to spreads
• Swap fees/overnight fees: These fees are charged or earned for holding a position overnight
• Account maintenance fees: Brokers charge fees for maintaining your account, such as inactivity fees, if trades are not placed within a period
• Currency conversion fee: If a trading account is in a currency different from the one traded, then a conversion fee applies
• Withdrawal or deposit fees: These fees apply when you transfer money in or out of your trading account

#19 Control Your Emotions

One mistake most beginners make when trading is letting their emotions cloud their decisions. Emotions influence the decisions of traders, both in winning and losing scenarios. 

For instance, after winning a trade, traders experience euphoria or overconfidence, which makes them take unnecessary risks or overtrade without proper analysis. This “winner’s high” can cloud judgment, resulting in careless decisions.

On the other hand, losing trades can also trigger emotional reactions like fear, frustration, and dispair. The emotions can lead to revenge trading, where a trader tries to recover losses hastily, ignoring their strategy and taking impulsive risks.

#20 Take Breaks

Forex trading is not a get-rich-quick scheme, as no trick or tip will ensure quick success. Most beginner traders often have unrealistic visions of becoming rich after trading for a couple of days, but the reality is that the journey requires lots of time and effort. So, be patient, take breaks when needed, and enjoy your trading journey. 

Conclusion

Beginning your trading journey as a beginner can be smooth with the aid of a professional mentor. WR Trading offers a mentorship program to educate and transform you into a confident trader. With our proven strategies and supportive trading community, we will guide you through the volatility of the market. Our practical approach will help you build long-term trading success. The right trading broker is essential to save costs and ensure quick order execution.