For a lot of millennials, the act of Forex trading may seem like an old person’s game. The statistics reflect it, too: a report by CNNMoney shows that a whopping 93% of the millennials surveyed distrusted the markets and lacked trading knowledge.
It’s not as easy as you may think, though, and there’s some things to get used to as you start going through the ins and outs of forex trading. Companies such as Learn to Trade can help make the process easier with strategies and video courses, but some of these tips may come through trial & error or general knowledge.
Look at markets outside the U.S.
With the emergence of high growth markets outside of the United States, potential investors may wish to look in other places for their trading. Keeping hold of a US-only portfolio means you may not be aware of or exposed to the fast-growing global markets elsewhere.
Not only can it help navigate around the problems in the US economy, it also allows you to diversify risk in your portfolios and potentially widen the areas in which to make significant gain.
Take more risks in the market
A study conducted in 2016 found millennials aged 21 to 36 to be the most fiscally conservative generation in almost 90 years. This is promising in general, but in a trading sense it’s dangerous, as this can cause what is known as compounding.
As a result, younger investors are encouraged to take notice of and diversify into more risky international markets – both emerging and frontier markets – to overcome the short-term volatility and take advantage of better potential in the long run.
This is also better for millennials or young investors: because they don’t need to withdraw funds for a long time, they stand to benefit as they don’t need to take it out at inopportune moments.
Make sure to balance
It can be tempting to assign a monthly or quarterly amount to a different investment in your portfolio, but the catch is that the performance of said stocks will influence their position.
It’s suggested by The Balance that you should check your portfolio periodically, and balance out to ensure the right amount of risk for each investment. Working with a financial advisor or investment program can also take care of this if you find the process too daunting.
Practice makes perfect
It’s pretty much guaranteed at this point that Forex trading is not a quick and easy success story.
Some investors will spend weeks, months and even years before they see any significant investment turn into profitable gains, so take time to practice and be patient with the markets. It’s also wise to speak with a broker who can help you use a demo account, so you can trade with paper money, before diving into using the real thing.
Keep a cool head
With the success rates for Forex trading very low – over 90% of investors are believed to end up empty-handed – it pays dividends to be calm and considerate about your way forward.
If you end up being successful on a significant investment, continue with regular trades. You run the risk of becoming overconfident, and with the volatility of most Forex markets, you can risk losing all of it in one go.
Similarly, if you end up losing a small amount, it’s recommended that you step away for a bit to reassess your options. Analysing where you went wrong can be a good way to refine your approach and perhaps come back with new ideas for trading in the market.