So Christmas is over and the New Year has started and you’ve made your New Year’s Resolution:
‘I’m going to learn how to trade Forex!’
Then what? If, like many others, you are psyched up and raring to go but don’t know where and how to make that resolution become a reality, then stick with me and read on:
Firstly, you might want to tweak your resolution and add ‘and be consistently profitable’ on to the end, because you no doubt are doing this to make money.
Around 90% of people fail in their attempt to become consistently profitable Forex traders for a myriad of reasons, please don’t let that be you! Also, you will probably need to temper your expectations regarding time scales to achieve your goal, as it may take anything from a year to as many as 3 years or so, to really make the grade. One way to fast track your Forex Training is to get yourself a good Forex Mentor, someone who is a successful Forex trader and also an honest straight talking teacher and mentor, they do exist! This will cost, but it will be money well spent, plus you will get to see what they are trading too.
The key elements to learning how to become a consistently profitable Forex trader are:
- Open a Demo Account.
- Get a good Forex Mentor/Tutor:
- Understand the Basics.
- Find out what moves the currency markets?
- Learn the basics about Fundamentals and news flow.
- Learn to identify key Support & Resistance.
- Learn about Supply and Demand and Order Flow.
- Learn how to conduct Basic Technical Analysis.
- Learn how to conduct Top Down/Bottom Up – Multi Time Frame Analysis.
- Ask Why, What, When and How and Google everything.
- Prepare for your Forex Training Lessons and ask intelligent questions.
- Get some good Forex Trading Strategies. Your Forex Mentor should teach you these & advise you.
- Practice, practice, practice and learn how to Back Test your Forex trading strategies.
- Learn to trade in the context of the differing time frames.
- Decide what type of Forex Trader you want to be and what times of the day do you want to trade to suit your lifestyle.
- Learn about and implement the 3Ms (Money Management, Method and Mind).
- Learn about the 5 Ps (Prior Planning Prevents Poor Performance).
- Be Honest with yourself and be Accountable for your Forex trading actions to someone else – get an Accountability Partner.
- Keep a Trading Journal and note your trades and observations as you progress.
- Draft an initial overall Trading Plan and develop it, as you progress as a trader.
- Develop (the) Patience (of a Saint) to wait for your chosen strategies to set up and don’t force trades. If in doubt stay out of the market.
- Develop and Demonstrate (the) Discipline (of a Soldier) in executing your chosen strategies to the letter.
- Always, always use a STOP LOSS but you need to know where to place it. Think about Risk:Reward and Technical levels.
- Learn to love your losses – every Forex trader has losing trades.
- Learn that No Trade is sometimes the best trade.
- Be selective in which trades you take – often less is more!
- Learn to minimise your losses and maximise your gains – this is NOT easy and requires mental fortitude.
- Don’t open a live trading account until you are consistently profitable in a Demo account over a period of at least 6 months if not a year.
- When you do open a Live Forex trading account start off with an account that allows you to trade Micro-Lots (0.01 minimum position size), because when you blow it up (as most do) you should be able to reseed it with minimal pain and also make sure it is sufficiently capitalised.
- Learning how to trade Forex is more of a marathon than a sprint so pace yourself.
- There is no substitute for experience in this game especially as the Forex market conditions can change quickly, so learn as much as you can from your Forex Mentor.
- Experience can also be gained from others – so don’t trade alone, try and find a group of like minded people to trade alongside with, this can help you be more disciplined and you will learn from them too.
- When you start don’t set you sights too high – be realistic.
- There is NO one Golden Button/Indicator/Robot or one perfect method to make millions in Forex. You have to build up a tool kit.
- 99% of all indicators are lagging – Price action is key!
- Trading Forex live is often different to that described in text books, some say trading is an art and some say it is a science, it is probably a bit of both and requires judgement on a case by case basis.
- Forex Trading can be addictive so be aware of that and remember that there are other things in life besides Forex, so try and pace yourself.
- Don’t stare at your screen all day – learn how to set Alerts and then go and do other stuff whilst waiting for trades to setup.
- No one can really afford to lose money, so any money used to trade Forex should be Risk Capital in addition to your savings etc.
If, after reading the above, you are still interested in learning how to trade Forex then we might be able to help you realise that New Year’s Resolution at Forex Trading London, but it does ultimately come down to you taking some action, so start HERE.
Forex Trading London wishes everyone a prosperous and Happy New Year!
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