7 Steps to Trading Forex
How to Learn to Trade Forex in Seven Easy Steps
For those who are serious about becoming successful traders in the foreign exchange market, the most frequent approach these days is to explore the Internet for knowledge that they can use directly to their live forex trading account. The trouble is that their quest frequently leads them to places where they will find a plethora of false promises, poor ideas, pessimism, and a preoccupation with metrics. Sadly, many of the EBooks available for purchase today are loaded with repurposed concepts or unfinished techniques that the writers themselves have never implemented. Many writers do not make money from forex trading, but they make a living by selling these EBooks to others who are just starting out in the forex market.
As a result, individuals who fuel the concept that foreign exchange trading is the holy grail of easy money may financially benefit from the very people to whom they have marketed this idea. Finally, what many of these forex gurus are selling is a blatant distortion of what it takes to make a life from forex trading.
Forex trading is not for the faint of heart. By putting in the necessary effort and treating forex trading as if it were any other talent, you may become an excellent forex trader. The fact is that it is difficult work that must be addressed with the same level of seriousness that you would accord to any other professional endeavor.
As a result of all of these gurus, many forex traders begin their careers excessively enthusiastic and with false expectations. While there is nothing wrong with having a good mental attitude, this optimism must be based on solid foundations and reasonable expectations in order to be effective.
For the most part, new forex traders begin their careers by acquiring a hidden set of indicators, and they are swiftly penalized as a result of their gullibility. Many of these forex traders then go on to acquire another set of hidden indicators until they get disillusioned and decide to quit trading altogether.
In reality, many successful forex traders, including myself, went through this learning process before they achieved their current level of success. You’ll have an issue only if you’re not willing to learn from your blunders. In order to be successful, you must break free from the loop of reliance on secret indications and guru methodologies.
Beginning with the notion that while anybody may trade forex, in order to be successful in the market, you must learn to BE a forex trader is something you can do for yourself.
TO BECOME A FOREX TRADING PROFESSIONAL
The process of trading forex is simple; all you need is a forex trading account with money in it, after which you just enter the foreign exchange market and begin to trade currencies.
Being a forex trader entails greater effort. As a forex trader, you must progress from a position of having very little knowledge to one where you have a trading plan, understand the concepts and behavior of the forex market, and are able to trade with a level head while understanding that both wins and losses are part and parcel of the job of trading in the foreign exchange market.
In Seven Easy Steps, you will learn how to trade forex by thinking like a forex trader.
1. Recognize your position in the Foreign Exchange Market.
This is really crucial; you must realize that you are a very little fish in a very large ocean before moving on.
The majority of the liquidity in the Foreign Exchange Market is provided by large financial institutions and skilled institutional traders. There’s a lot of fish in here. The huge fish will gladly accept you as a little snack and will joyfully eat you.
If you believe that it will be simple to take money from these large forex traders, you are deluding yourself.
You must learn to swim alongside these large fish and to catch the same currents as they do in order to survive. Swimming against them just serves to identify you as prey, and you will be devoured sooner or later.
2. Acquire the ability to read forex charts and comprehend the foreign exchange market. 3.
Many novice forex traders believe that these big forex traders have access to a secret forex trading strategy or that they use a secret set of indicators, but the truth is that this is simply not the case. Instead, these big forex traders employ a variety of indicators that are widely available to everyone.
Most frequently, these top forex players employ simple, but well-proven technical analysis approaches – most notably, horizontal support and resistance levels, identification of trading ranges, and Fibonacci retracements – which are then combined with fundamental themes.
Beginning with the awareness and acceptance that the other big participants in the market have a great deal of expertise and a thorough understanding of the fundamentals, rather than because they possess the holy grail of hidden indications, you may begin to earn money in the market.
3. Managing Your Financial Resources
For new forex traders, it’s critical to realize that the emphasis is not on how much money they may make from forex trading, but rather on how well they manage what they already have.
This is the most typical pitfall experienced by all beginning traders. It is not uncommon to see a new trader invest the bulk of their account’s value on one or two trades in the beginning.
It is not sustainable to trade in this manner, which is why professional traders do not trade in this manner. Every professional will have a run of poor transactions at some point in their career. A classic example would be a string of ten losing transactions in a row. What is important is whether or not you have a money management strategy in place that will allow you to endure this.
4. Concentrate on the Market
Many new forex traders open their forex charting software and activate the newest hot indicator or tool, then proceed to place their trades in accordance with the advice of the indication or tool. In the long run, it is doubtful that this kind of forex trading would be successful.
Traders quickly switch to another set of indicators if the first set of indications fails to deliver the gains they seek.
You must concentrate on the forex market and comprehend what the indicators are saying you in order to be able to select the forex transactions that have the greatest chance of being profitable.
Forex traders that are successful employ indicators and tools such as Fibonacci, Pivot points, price channels, MACD, RSI, and so on. These tools do not, in and of themselves, create a great trader. There are many successful traders and many unsuccessful traders that employ the same same indicators, and they all have different results.
The important thing to remember is that successful traders understand how the market behaves around the indicators and grasp what the signals imply in real life.
Stopping yourself from switching between tools and selecting those that complement your trading plan, understanding how they operate, and then spending time in the market with them is the most effective method to do this.
5. Make a plan for your transaction and execute your strategy.
This is a common adage that appears to have escaped the notice of new traders. Every trader’s objective should be to make pips on each forex transaction in accordance with their trading plan. Forex traders must consider each transaction as a business decision, evaluating their risk and setting their entry and exit points in such a way that they do not expose themselves to significant losses if a trade goes wrong.
Many new traders appear to lack the discipline necessary to stick to a trading plan for each deal. A common scenario is as follows: a rookie trader notices a possible set-up, they make an educated estimate at an arbitrary quantity of money to purchase or sell and then place the trade without assessing any risks or developing an exit strategy before entering the transaction.
Of fact, this method of trading can be lucrative in the short term, but it is more dependent on chance than on expertise. However, ultimately, the trader’s luck runs out, and he or she is caught asleep, with the most typical outcome being a wiped out account.
The first question that most inexperienced traders ask themselves is, “How much money will I make on this FX trade?”.
The first thing that experienced traders ask themselves is how much money they stand to lose if they lose their bet.
6. Your intellect is both your most valuable asset and your most vulnerable connection.
There have been entire volumes written on the subject of psychology and its use in the trading world. That does not necessarily imply that they will all be helpful, but you should consider this as a hint that the issue is not to be disregarded.
First and foremost, you must comprehend the function that psychology plays in trading. Understanding your personality features and how they may influence your trading style is an important skill to have.
An experienced trader that I know has a poor losing streak, and when he does, he has a bad tendency of coming back and attempting to earn those pips back, which leads in even worse outcomes. However, he recognizes this as a weakness, and after a particularly disastrous transaction, he takes a 20-minute pause before returning to trading to ensure that his emotions do not influence his trading selections in the future.
Second, you must set yourself the goal of never ceasing to study. You can’t achieve a certain degree of success and then get complacent about it. Every day is a learning experience in some form, and you must be prepared to learn new things and put in the necessary effort to improve your abilities and experience to be successful. It is recommended that you cease trading on the day that you stop learning.
7. Recognize that the Forex market is always correct or that it is normal to expect the unexpected.
The forex market is a fascinating place to be, but there is one thing that every trader should be aware of. Always be prepared for the unexpected and avoid getting too caught up in past accomplishments. No matter what your charts or indicators tell you, the forex market has a tendency to behave in the other direction at times.
Whatever occurs in the market, you must keep an objective perspective on your approach and the forex market in order to avoid being derailed in the long run by bubbles and collapses.
The methods outlined above, as well as learning to become a forex trader rather than simply trading the forex market, will set you on the fast track to being a profitable forex trader. This is something that 90 percent of all rookie traders are unable to do successfully.