So, you are interested in forex trading, or maybe you have just found this article. For those who don’t know what forex is, in short, it is a global foreign exchange market, in other words, it is a market where market participants are buying and selling currencies. Maybe you are just starting to learn about it or maybe you have already lost one or more deposits.
In today’s marketing, trading forex is shown as a quick and fast way to make a lot of money from a small investment. Some brokers claim that you can invest as little as 100 USD and earn money every day. Forex brokers give you some basic info and huge leverage. That’s the wrong thing. Forex trading is not a “get quick rich” scheme. It’s a long and hard journey. Trading is a business and like in every business you must have a strategy, discipline, and right attitude, it’s not a casino.
How to start trade forex?
First of all, you have to learn basic things, some technical and fundamental subjects. Secondly, you have to start trade only with a forex demo account. If your balance in a demo account is negative, don’t begin to deal with real money. When you are comfortable with the basics, it’s all about practice.
The most important things if you want to become a profitable forex trader are:
1. Always learning
2. Trading strategy
3. Trading rules
4. Money management
5. Risk management
7. Psychological stability and comfort
If you are profitable in your forex demo account after 2-3 months of trading, you can open a small live account. Choose an amount of money you can afford to loose without any influence in your everyday life.
Remember, that most likely you will lose your first deposit, it’s a regular thing, and it’s not your broker’s fault, it is all about you only.
Underestimating the expectations
There are lots of articles on the internet where trading showed as a very easy way to make huge amounts of money; it’s not true! Remember that approximately 95% of retail forex traders lose money, but it is not a market’s problem, beginners are taking too much risk and have the wrong expectations.
The percentage of people who are losing money is very similar to other activities and markets. For example, from ten new companies after one year only one will survive. Another example is poker, only 1-5% of poker players make money in the long run.
So if you have decided to try trade forex, the first thing you have to understand is that it’s not gambling, and won’t get rich quick, it’s possible that you will lose your initial deposit, give up and never be profitable.
Let’s imagine you are starting a new business, there are no guarantees that your business will be successful. A lot of things relate to your success: experience, education, skills and so on.
In Forex market, it’s the same: if you don’t have any knowledge about it – you will never make money.
First of all, you have to learn, read, try to understand what is happening, spend a lot of time practicing (with demo money). The second and significant thing is not to make money – it is not to lose money, in other words – to keep your capital and slowly grow it.
I think most people who are starting trading just guess, random without any explanations and after that they lose money. Only then people begin to think about what went wrong. There’s nothing wrong about it. Some people can learn from their mistakes and after some time they become profitable. Others continue to trade randomly, lose all of their money and are blaming markets, banks even God for their problems.
Of course, you can trade forex randomly on your demo account and just look what will happen, but please don’t do it with real money.
To be profitable in the markets you need to have an edge. In my opinion edge are knowledge and constant learning. You must stick to your rules, manage risk and work on your psychological stability.
So how to work on your skills?
I think the things you have to do are:
1. Read articles on internet sites about markets, trading, economics.
2. Use Twitter to follow forex subjects
3. Use YouTube to learn basic things
WORST things you can do are:
1. Read the forums
2. Buy forex trading scripts
3. Buy fx trading signals
Remember that there is no such thing like “I know everything”, you need to learn all your life. After you have some basic trading skills, start trading demo.
I suggest screenshots with your notes and reasons why you have entered a trade. After you close trade, you need to make another note to what has happened.
As I mentioned above currency and other financial markets are a business; it takes the time to succeed.
It won‘t be easy. Most people don‘t even achieve that level when they can earn money, so many people break down at the beginning or in the middle. Be ready for long and hard work.
It’s critical to understand that it‘s not gambling, don‘t try to gamble, use risk management, the size of a position must choose wisely. It’s all about stability, not about one or ten trades.
Each year I think that I know so much, but almost every day I learn something new. So learning is vital.
You have to value your time and money because in this business capital is your primary tool. Sometimes the best way to keep your money doesn’t trade forex at all.