Taking Your First Steps In Forex Trading
Starting your journey in the Forex market is an exciting, incredibly rewarding feeling. But before you deposit a lump sum into your trading account, there are a few Forex trading success tips that, when read and acted on, can improve the chances of you becoming a profitable, successful Forex trader. I can’t over-stress the fact that beginning Forex traders need to approach trading with caution.
1. Save, Save, Save Your Money
Trading cost’s money. Both in the short and long term. The physical act of placing a trade cost’s money, let alone the money you will inevitably lose from making bad trades. But don’t worry, losses are bound to happen in the early stages of your trading journey. But it’s important to remember that you have the power to prevent unnecessary losses from happening before they happen by not trading at all. This is especially tru if you don’t have a trading plan in place.
Apart from the money you will spend making trades, you’re bound to spend money on trading courses to learn advanced techniques, trading tools, indicators, robots, educational material such as books, signal services, and variety of other things most beginning Forex traders get sucked in to purchasing.
I won’t sit here and tell you not to spend your own money on these things, it’s your money, and we all do it, but it is a good idea to be aware of the fact that if you do make it past the beginning stages of Forex trading and are profitable years down the line, that you’re probably going to look back at all those extra bells and whistles as unnecessary expenditures.
If you’re serious about being successful in Forex trading, then it is a good idea to invest in a training course from a reputable trader. Word of advice: Spend your money on price action and candlestick-based strategies and courses, not on systems and indicators.
2. Keep It Simple
Jumping into the huge world of Forex trading is fun and exciting, and by pondering the idea that you can trade Forex successfully, it gets even more exciting. But for some reason beginning traders love to make things overly complicated, even in situations where there’s no need to do so.
While the Foreign Exchange Market is vast, complex, and takes time to get accustomed to, it’s nowhere near as complicated as beginning traders like to make it out to be. There’s something about our brains that love to turn simple concepts into complex ones, and with this said, most beginning Forex traders are bound to:
- Try and learn everything at once—often resulting in paralysis by analysis.
- Incorporate the fanciest of trading concepts into their trading strategy just because it sounds or looks good (Harmonic patterns, Elliot Wave, robots, etc.)
- Use every tool, indicator, robot, expert advisor, software, or service available.
The single most important tip for beginning Forex traders to absorb is this: Put on blinders and start your trading journey with a narrow state of mind.
Sounds counter-intuitive, but these are words of wisdom. Look around at different trading tactics and strategies, find one or two that interest you the most, and focus on learning and applying them on a demo account until you’re comfortable with your new skills.
Go step by step with each trading tool you like until you have an arsenal of knowledge on a variety of different trading tactics. Also keep in mind that learning the world of Forex trading is not a single-week event. It takes time, and so it is best to approach Forex with a marathon mindset as opposed to looking at trading as a sprint to the finish line. (Hint: there is no finish line.)
3. Be Realistic With Your Expectations
Is there something you expect to achieve within the first, say, three months, six months or two years of your new trading career? If you do have expectations for yourself and your trading, write them down. Jot down yearly goals, as well as goals for shorter and longer time periods.
Where you do you want to be at in your trading in ‘X’ amount of time?
Here are a few key things you should and should not expect at the beginning of your path towards achieving Forex trading success.
Do Not Expect: to take a course by a self-proclaimed veteran trader and then afterwards go out and be consistently profitable to the point where you can trade for a living. It won’t be that easy. And in fact it will probably benefit your broker much more than it benefits you.
Do Not Expect: to start making a living and be able to support your family off your returns after only 6 months. Have a conversation with any real professional trader and he’ll tell you it takes a minimum of several years to finally become profitable enough to live off your Forex trades.
Do Expect: to fork over at least some money to your trading education. Education should be the primary focus for any new beginning Forex trader who wants success. And as mentioned above, even after you start a 6 month mentorship program with the best of the best, you can still expect to lose money when you start trading live. Even if you start off on the right foot and have a series of winning trades, there will be that inevitable string of losses that puncture your ego and and make you question your ability to trade. Be ready for that, but don’t give up.
As with any other professional venture in life, Forex trading will be filled with failures, hardship, self-doubt, and, most of all, fear and greed. And sure, there’s a pot of pure gold waiting for you at the end of your Forex journey, but it won’t come fast or easy. This is where Forex success tip #4 comes in handy.
4. Study Harder Than The Other Guy
We’ve already been over the fact that achieving Forex success will not come easy and will take a significant amount of time. Never make the arrogant mistake of thinking you can turn a hard profit in under 6 months.
There are stories of individuals who think its a good idea to leave their day job after they’ve saved up $15,000 for trading, without doing any real significant homework on the market they’re about to try and trade.
Do not be this guy.
Because successful traders will tell you that it takes years to enjoy consistent profits from Forex trading, be ready to study harder and longer than anyone you know if you want to churn a long-term profit. How many years of school do people go through if they want to be engineers, mathematicians or doctors? Study your subject the same way an aspiring anthropologist would, and don’t even think of looking back.
5. Channel Your Fighting Instincts
A lot of people are initially drawn to Forex trading because of those over the top advertisements and informational products that feature a guy reclining in a hammock on a beach while a supermodel serves him a martini. The unfortunate truth is that if this guy really does exist, and if he does, he put his time in the trenches to get that reward.
Any successful Forex trader will tell you all about their late nights of frustration, days of no sleep, outbursts from making stupid mistakes and so on. Sure, it can be good to keep your eyes set on the ultimate prize, which is Forex success, but you also need to be extremely focused on the task at hand, on what’s right in front of you.
You are guaranteed to lose as a new Forex trader. No matter the winning streak you have, you’re bound to come tumbling down to reality with a slap from the market. The Foreign Exchange market will test you like nothing else, so you might as well be honest with yourself now: if you don’t have the ability to instill high levels of courage and stamina throughout the duration of your trading career, then this path might not be for you!
6. Beware Of Predators
As mentioned above, the Forex trading industry, as well as the internet in general, are filled with self-proclaimed guru’s pushing pricey systems and indicators that they guarantee will turn you into a wealthy, successful trader.
Most of these guys are flat out scammers. A genuine trading coach or Forex mentor selling something will be up front and honest about the risk involved, and the costs associated with achieving consistent profits. If you really need a Forex mentor or coach of some kind, then start by looking for individuals or companies whose sales pages convey the realities that come with trading, in addition to the benefits, which are very often over-hyped.
But looking at a shady trading signal provider or Forex service of any kind can have its benefits. By examining scams, you get an idea of what to look for in people you can trust. A lot of this is a learning process that comes with years of experience, but until that time, I genuinely hope that you and many other traders come to see BinaryOptix as a helpful currency trading resource.
7. Go Demo
After taking heed of the first six steps beginning traders should follow, then you’ve made it past most of the grunt work after following the six tips for success in Forex trading, you’re officially ready to start trading on a demo account. No matter how badly you believe in your own ability to generate profits as a new trader, it is completely unnecessary to risk any of your hard earned money without first testing your strategy on a demo account beforehand.
You need to apply your trading strategy to live markets on a demo account and be profitable for a definitive amount of time before you transition to speculating currencies using your own hard earned money. A good rule of thumb for demo trading is 3 to 6 months.
Most Forex and binary options brokers offer free demo accounts for whatever charting platforms they support. Metatrader 4 & 5, cTrader, Thinkorswim, and even TradingView offer free demo accounts. Take advantage!
8. Go Live
After you’ve started to generate decent weekly and monthly returns on a demo account then it’s time to make the exciting transition to trading Forex with real money.
First step: Start small! Most Forex brokers require minimum deposit amounts. Start out by depositing the bare minimum to get your Forex feet wet. For some brokers this might be $50 to $200, while some offshore brokers only require $10.
Follow your trading strategy to the T. Everything from risk acceptance and lot size to money management specifics should be followed in accordance to your trading plan.
Create a system for gauging your trading plan’s overall effectiveness. A good strategy doesn’t necessarily mean a strategy that is just profitable. You need to define what you consider to be a good effective strategy and then strive for that through back-testing to verify the results.
9. You’re Not A One Man Army
I don’t know of any successful Forex trader who has made it to the top alone. Every professional trader will, at some point in their trading careers, seek out mentors or like-minded individuals to bounce off trading ideas and share charts with. As mentioned earlier above, it can be a very good idea to invest in some type of educational course or mentorship, join a trading forum or all-in-all just network with other traders.
With this said, be careful about the people and websites you choose to spend your time on for learning Forex. Free forums are OK in small increments, but many forums are filled with unsuccessful traders who run around and shoot everyone’s ideas down while they sit on a twisted power trip. A lot of negativity and conflicting ideas can be found on free trading forums and websites, be weary with who and where you decide to share your trading ideas and charts.
10. Patience Is Powerful
There are some professional Forex traders out there who rarely make trades. They might have a profitable system with winning parameters to follow—but they rarely ever trade, and are still able to turn a profit.
The point is this: patience is one a traders greatest natural assets. You can’t buy patience! You should strive to instill patience into your daily life as much as possible. Just because it has been a week since you’ve seen a qualified set-up following your strategy doesn’t mean you need to force yourself into sub-optimal trades with shaky risk to reward profiles.
Learn to be patient with yourself. There won’t always be a trade available in each moment, but the markets will always be there tomorrow. Write down these ten Forex success tips and you’re bound to start your new trading journey off on the right foot.