Chances are at one time or another, you’ve been asked by well-meaning friends to join the train of online forex traders. Or your interest has been piqued by the business and you’ve been told by numerous online sources that the best way to make money is trading forex online. Either way, it’s always important to understand the pros and cons of any venture you wish to embark on. Best believe it, it is not always bright and shiny in the online forex trading world.
- It is easy to trade in online markets
- You have access to a great amount of leverage making it easier for small retail traders to start their journey even with little capital
- Your capital can be lost quickly when you use leverage trading.
Are The Stories Real? Can You Make A Living Trading Forex?
The internet today is rife with numerous forex trading victories. Are they just another cheap PR to get unsuspecting victims to embark on forex trading? The truth is there have been plenty of genuine forex trading success stories. But it all depends on you. How willing are you to work? How ready are you to learn the process?
Professional Forex Trader Ezekiel Chew has put down some seven noteworthy ways to become an excellent forex trader, beat the majority, and scale to impressive heights.
1. Learn The Trade Before You Trade
Despite how exciting the process of trading may seem, it is always better you look, or in this case study, before you leap. That’s right. The better part of your excitement should be spent learning the art of trading.
Any Tom, Dick, and Harry can open an account and start trading, but it takes so much more to make the money you dream of. Not to mention the tendency to be easily frustrated and to incur huge amounts of debt when you do not understand the process well.
How can you learn? A proper forex trading course is the best place to start your journey towards a successful forex trading path. They’ll teach you all the rudiments of trading independently and provide you with ample knowledge of trading strategies for the long run. You’re also sure to get follow on support when you embark on trading.
Make sure to be wary of scammers who promise quick success in a short period. A simple hack is that a good trading school will never promise such. They’ll only promise to teach you everything you need to know to trade effectively.
2. Set Up A Demo Trading Account
If you want to practice the trading process and get accustomed to the nitty-gritty involved, a demo account is an answer to your prayers. It enables you to practice forex trading on a “demo” capital, which is not real capital. This is because a demo account does not require capital to function.
Some of the perks are it helps you to get used to the trading interface and the process of placing orders on dummy trades. So when you do eventually start really trading, your boat would be smooth-sailing. A demo trading account provision is available on several trading platforms.
3. Beginning A Piecemeal At A Time
Trust us, you do not want to throw in a large amount of money at the initial stage of your trading quest. For one thing, a lot is at stake when you do, plus the emotional upheaval this may cause.
As a newbie, it’s best you start trading with a small amount of money and in the process, master the skill. You'll also have a lesser tendency to risk your account in the process. Leverage and margin also give you the ability to start really small. A good trading school will teach you all you need to know about leverage and margin.
4. Do Not Feel Overwhelmed; Price Action Is All That Matters
Do not fall into the bandwagon of nouveau traders who clutter their chart with so many indices. Best believe it, at the end of the day, price action trading is all that matters. This cluttering of your chart also diverts your attention from what matters in the grand scheme of things, and you’re often rendered immobile from the numerous factors to consider.
And of a truth, technical analysis is not hard to decipher. It’s all about buying at very low prices and selling at a high price. The same way a trader would want to purchase goods in a store or from a manufacturer at low prices and sell to customers at a high price.
You will find that a good number of institutional traders do not care to crowd their charts with several indicators. They simply analyze prize levels and make a decision either to buy or sell within these prize ranges.
5. Find A Forex Trading Strategy That Works
We like to think that several indicators on a chart are like several stick-it notes on a refrigerator. You most likely placed them there to remind you of important things. But because they are many, they end up confusing and even frustrating you.
A good forex trading strategy that works need not be complicated. What is important is that it gives you an edge in the market. Look at trading in the long run. When your wins are more than your losses, you will be profitable. Finding the right forex trading strategy that is time tested through a series of successful backtesting is highly important.
Start off by mastering one strategy in a single pair. Swing trading strategies are one of them. Only move on to the next pair or strategy when you are profitable in a series of three sets of 20 trades. This way, you have a clear idea on whether or not you are profitable when compared to someone who is trading a range of different strategies and various pairs.
6. Trade Within Your Limit
It is important to remember that a lot could go wrong with any trade at any given time. Do not be tempted to trade outside your accepted risk exposure in a week. Especially as a new trader, you could easily bankrupt your account in a short time when you trade above your limit.
Another advice is to count your losses and never keep a trade beyond the loss of its value. If chances allow, you ought to move to protective stop loss to decrease your losses. You also want to go the extra mile of protecting your profits by taking profits at strong levels.
One more thing: you should make use of trailing stops to protect winnings and at the same time creating an avenue for it to grow.
7. Keep Track Of Your Trading Journey
There’s a reason why companies hire firms to audit their account. While your forex trading may not be the same as a company, they are both business ventures with the aim of making a profit. This way, you can determine how your trading has been going within a period of time. Your losses too should be accurately accounted for.
Keeping a record also serves as a practical lesson. Trading is essentially a lot of learning and a little doing. How fast you learn from your mistakes and apply your newfound knowledge will go a long way in projecting your profits and boosting your morale.
We understand that the art of forex trading can prove to be an emotional rollercoaster especially for the newly indoctrinated. However, it is important to take any losses with a grain of salt, for it is a part of the whole process of trading. Sometimes you win, other times you lose. What is important, however, is that you learn from your losses and wins too.
One strategy is to always make plans and be deliberate about those plans. Try to map out a clear cut pattern to attain any goal you set. Diligence and experience are what make a successful forex trader. And a right attitude to loss is what makes it a learning experience.
Some of the things you could include in your record taking include:
- The date the trade was made
- Screenshot of the chart of every trade
- Explanation of where the trade was taken and reasons for the execution
- Write out your performance in the trade
- Write out how your performance makes you feel.
Creating a word document can help with all this.
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