The forex market has a low barrier to entry, making it highly accessible. But one of the biggest challenges for Vietnamese forex traders is the lack of information present about getting started with forex trading.
Before taking the plunge into the forex market, take a look at these do’s and don’ts of forex trading Vietnam:
Do’s of forex trading in Vietnam
Convert VND into a major currency
While it is possible to trade the forex market in Vietnamese Dong, it's important to convert VND into a major currency like USD or AUD. That is because most forex brokers have either USD or AUD as their default currency. Trading in one currency makes it easier to understand pricing, spreads, and other related fees more clearly without having to constantly do calculations.
To further simplify the process, traders can opt to fund their trading account through VND only and then have the forex trading platform convert it into their default currency.
Find a reliable broker
Take time to select a forex broker before finalizing on one. Make sure that the forex broker is regulated in Vietnam. At the same time, a big part of research should include looking for reviews about the broker on Google and other forums. Look into the deposit and withdrawal methods provided by the broker as well, and if they offer 24/7 support.
Start small
A rather common mistake that most beginner traders make is diving straight into big trades. However, it is critical to avoid initiating a deal impulsively and instead to think it through thoroughly.
Smaller trades are recommended for novice traders who are just getting started in forex trading.
They can focus on improving their skills and gradually building confidence by taking a patient and steady approach. It is critical to note that in the trading industry, beginner’s luck may sound great in principle, but it does not always work out in the trading world. That is why novice traders should accept that there will be some mistakes at the start and focus on making sure those mistakes don’t turn out to be too costly.
Choose an appropriate currency pair
Traders should select a currency pair based on the level of volatility that they are comfortable with. At the same time, they should look into the peak trading volume for the currency pair when they will be available online to trade.
Not so surprisingly, the US Dollar is the strongest and most widely traded currency in the world. This is due to the size of the US economy and the preference for USD for making currency exchange transactions.
As a result, beginner forex traders can start by trading currency pairs with USD like EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, and USD/CAD
Disclaimer: These are examples only - Blueberry is not providing personal advice on trading these specific currency pairs.
Establish stop-loss orders to mitigate risks
Traders may not always have the time to monitor the market, and if they are not careful, sudden fluctuations in the market can lead to big losses.
Stop loss orders can help mitigate risks by protecting existing trading positions. Placing a stop-loss order is offered as an option by forex trading platforms whenever traders place a trade. It's possible to modify stop-loss orders any time.
Designed to limit potential losses, stop-loss orders trigger a market order to trade when the price preset by the trader is reached. The biggest advantage of a stop-loss order is that traders don’t have to monitor the markets in real-time.
Learn about the forex market
The one thing that sets experienced traders apart from novices is their experience and vast knowledge. Experienced traders use technical analysis and in-depth charts to make a trading decision. On the other hand, novice traders prefer to go with their guts.
There is absolutely no way to overstate the importance of learning about the forex market. Traders should take their time to study about currency pairs, trends in the forex market, chart patterns, analysis tools, and more before placing big orders. In fact, traders can also join forex trading programs online to slowly and steadily build their forex knowledge.
Define trading style and goals
Before setting out on the vast journey of the forex market, traders should first get a clear idea of their destination and how they want to get there. They need to have goals in mind to make sure their trading approach can help them achieve those very goals.
Every trader needs a trading profile that aligns with their risk profile and trading goals.
Clearly define both entry and exit points
It can be incredibly confusing when charts in different timeframes give out conflicting information. For instance, a weekly chart may show a buying opportunity whereas the daily chart may show a selling opportunity.
That is why traders should focus on synchronizing the two before determining entry and exit points. So if the weekly chart is giving a buy signal, wait for the daily chart to confirm the buy signal as well before making a move.
Don’ts of forex trading in Vietnam
Sign up with an unregistered broker
Depositing money with a new forex broker is the biggest trade that traders will probably make. If the broker is unreliable, unregulated, or has poorly managed funds, traders can end up losing all their money.
That is why it is important to take time when choosing a broker. Traders should ensure the broker is registered with a regulatory body and has a good reputation. Use reliable sources for broker referrals and test out the broker with small trades before investing a big amount
Set unrealistic expectations from forex trading
Many people can make the forex market sound like a gold mine and a sure shot way to succeed in trading. But the truth is that the forex market is highly volatile, choppy, and trending in all long-term, medium-term, and short-term cycles. No matter what someone says, there is no one tried and true method that can lead to definite profit (or loss). Setting up big expectations from forex trading will only lead to big disappointments.
To avoid unrealistic expectations, traders should develop a trading plan and continuously tweak it to implement new trading strategies.
Risk more than one can afford
One of the biggest mistakes a new trader can make is risking more than they can afford to lose. It can not only jeopardize the trading capital but it can also significantly deplete the account balance as well. More importantly, continuously risking more money that traders can affect to lose can eventually cause emotional distress and even cloud judgment. Constant fear and anxiety can make objective and rational decision making challenging for the traders.
Overreact
The volatile nature of the forex market can sometimes make traders overreact. Sudden ups or downs can make traders irrational and emotional, and even tempt them to take knee-jerk decisions which may not even align with their trading plan.
It's important to remember that even the most expert forex traders don’t make the right trades all the time. Accepting losses is a part of being a forex trader. Remember that in the long run, losses should get offset by the profits one is making .
Trade without a plan
A forex trading plan outlines the trading strategy. It helps define what and when a trader will be trading the forex market. An ideal trading plan would include what currency pairs a trader would trade, the timing for the trade, and the timeframe for the same. The plan would also include risk management strategies and how exactly the traders would enter or exit the trades.
When traders don’t have a trading plan in place, they end up making a lot of decisions based on their gut feeling instead of basing their decisions on actual data.
Adding more to a losing day
It can be tempting to place more orders on a losing day with the goal to make up for the losses. But this mistaken belief that the trend will eventually reverse can lead to even more disappointment.
Instead, traders should focus on proper position sizing and setting up stop-loss orders for each trade. In case the price hits the stop-loss pre-set pricing, the trade will get closed down automatically which will reduce the risks.
How to trade the forex market in Vietnam?
When it comes to forex trading in Vietnam, it's very important to find the right broker and the right currency pairs to trade.
Here’s a step by step guide to trading the forex market:
- Find a reliable forex broker: The forex broker should be regulated and licensed by required regulatory authorities. At the same time, the broker should be able to reliably convert VND into major foreign currencies like USD and AUD.
- Sign up for a trading account: Most brokers offer different types of trading accounts, with different fees and commissions. Create a trading account based on the main requirements and provide the required information/documentation to the broker.
- Deposit trading funds: Next, traders should fund their trading account to start trading the live market. In case traders are funding their account with VND, they can convert it into a foreign currency like USD or AUD for trading. Most forex broking platforms can directly convert local currency into USD or AUD, and they charge according to the real-time conversion rate.
- Start trading: With the funds deposited and converted, it's time to trade the markets.
Trade forex markets with confidence
By knowing these do’s and don’ts for forex trading, traders can continue trading with more confidence. With Blueberry, forex traders can get access to low spreads, 24/7 support and quick withdrawals.
Sign up for a live account or try a demo account on Blueberry today.
