Trading can certainly prove a challenge. As a trader, you want to do all you can to steadily and consistently make a profit. However, this can prove quite difficult, especially when you’re just getting started. It can be difficult to know how to begin your trading journey.
If you are new to trading, you undoubtedly have many questions about achieving profit consistency. What should I focus on when I’m getting started in trading? What kind of trading would suit me best? What are support and resistance, and why is it important to understand how they work?
This article will help answer these beginner questions and give you a few tips to help you get started on your journey.
Trading Is a Skill That Needs Refining
The most important thing to realize before embarking on your trading journey is that trading is a skill. And, like any other skill, it needs to be honed. When you begin trading, the best thing you can do is learn as much as possible and pay close attention to the markets.
As a beginner, you must realize that you have very limited knowledge of trading—and that’s okay! All that means is that you should take things slow and steady and think carefully about every trading decision you make.
Take the Time to Analyze the Situation
It can be easy to get swept up in the excitement of trading, especially when you’re just starting. That’s why it’s important to be as logical and methodical as possible when deciding your next move.
Even the most seasoned trader still takes the time to review their trading session at the end of every day. Paying attention to what the market is doing today can help you determine what it will do tomorrow, meaning that you can come up with a game plan before the next day of trading has even started.
Make a Plan
Make no mistake: making and sticking with a plan is absolutely crucial in trading. A trading plan should include your methodology, asset evaluation criteria, profit goals, and, crucially, how much risk you are likely to take.
If you have a solid plan, you have something to hold onto when the excitement of trading—or, on the other side of the coin, the fear of losing money—kicks in. Once a trade has been placed, you are less likely to think rationally and objectively about the situation. This is when you fall back on your plan.
Figure Out What Kind of Trading Suits You
When you’re new to trading, it can be helpful to experiment a little with the different kinds of trading styles out there. There are four main trading styles, and you may find that one suits you better than the others.
While it’s not expected that you go into trading immediately knowing which trading style you will subscribe to, it can be useful to give this some serious thought. Are you patient and analytical, always playing the long game? Then position trading might be for you. Are you a thrill-seeker—someone who thrives under pressure and can make quick decisions? Then scalping might suit you best. Perhaps neither of these are what you’re looking for, and day or swing trading might be the route for you to take.
There is no right or wrong answer regarding which trading style suits you. The best thing you can do is research and experiment.
What Are Support and Resistance Levels?
Support and resistance levels are the names for levels on a price chart that act as barriers to an asset price’s range of movement. The support level is the point at which the price stops steadily falling and begins to rise again; the resistance level is the point where the price usually stops rising and declines again.
It will help if you learn how to identify support and resistance levels, as they can be very useful in deciding when to enter the market. This is because knowledge of these levels can allow you to predict what the market will look like in the future.
These are just a few guidelines to help you start as a trader. If you do your research and follow these tips, you are sure to get off to a good start in forex trading!