Why are you reading this? Maybe you’ve heard that a lot of people became rich from trading forex and you want to be one of them. Maybe you’ve already started trading forex and haven’t gotten the results that you expected. Or maybe you just want to learn more about the foreign exchange market.
Well you’ve come to the right place.
Success in forex begins with proper education, and we will help you learn to be successful. There are three simple steps to becoming an expert trader:
Step 1: Study
Step 2: Practice
Step 3: Study and Practice
Step 1: Study
As a beginner, your main focus should be on learning the basics. Start by learning some definitions like pips, trading pairs, and stop loss. Then work your way towards learning technical analysis. Don’t just memorize the definitions, understand how they work. The biggest mistake beginners make is skipping the basics.
Don’t skip the basics.
You need to walk before you run. If you start trading forex without understanding the basics, you will fail. And that is a fact. Progression is the key to learning any new skill. Master the basics first and everything else will come more easily.
Studying takes time and discipline.
The amount of time you devote to studying is the ultimate factor that determines your success. Many people think that trading forex can make you rich instantly. Instead, they end up losing all their money in a matter of weeks. These people aren’t wrong; trading can take you down the road of financial freedom. However, this can’t be done without some hard work. Trading forex is not a get rich quick scheme.
Your high school English teacher was right. Knowledge is power. Any time used to learn something new is time well spent. If you spend a few weeks learning a new strategy which will make you hundreds of thousands of dollars in a few years, I would say you have invested your time wisely.
Very few people appreciate the amount of time it takes to master a new skill. It takes people years to be really good at what they do. Whether it’s playing the piano, tennis, or cooking, they all became experts by first learning the basics, and practicing everyday until they master the skills.
Step 2: Practice
My old high school basketball coach once said to me one thing that I will never forget:
“Practice doesn’t make perfect, perfect practice makes perfect”
You have been trading every day for the last year, and yet you continue to lose money. Surely you’ve had enough practice, you say. Why aren’t you any better at trading now than you were a year ago? The year of practice has made you a better trader, but the difference is so small that you don’t notice it.
Imagine you give someone who knows nothing about basketball a basketball and tell him that the goal of the game is to get the ball in the hoop. With no training and no knowledge of the game, this person diligently practices everyday. You greet him one year later to see his improvement, and to no surprise, he is a better player. But his form is ugly, he’s breaking every rule in the game, and he is still a horrible player by any standard.
What happens if he had picked up a book to learn the rules of the game and asked a coach to teach him the fundamentals? He will be able to practice the game with the correct techniques and the time he spends will pay off and turn him into a much better player.
The best way to learn the basics is to open up a demo account.
There are many companies like forex.com and oanda.com that allows you to practice free with a demo account. Take advantage of this. You have nothing to lose and everything to gain.
Use your demo account to try different strategies and techniques. Get to know all the features of your platform so you can take advantage of them when you start trading for real. This is your training ground. Your mistakes won’t cost you a penny here.
The demo account is the perfect place to decide which broker fits your needs the best. Pay special attention to the spreads, and how they vary during news events. Also notice the speed of execution, and the reliability of the platform. You will probably receive high pressure e-mails telling you the advantages of depositing real money at this stage, but it pays to be patient.
Take as long as you want practicing in a demo account. However, when you are ready, take the plunge.
You will never improve unless you start trading with real money.
Trading with play money will teach you how to be good at trading play money. Some people are masters at trading with play money, but fail miserably when they switch over to real money. That’s because they are willing to take risks that they will not take with real money.
Trading with real money is a completely different game. The rules may be the same, but the fear of losing money becomes real. That is why I strongly suggest starting with a micro account and practice good money management. When you can consistently win with the micro account, then you can move on to the mini account. And only when you are consistently profiting in the mini account should you move to a regular account.
Step 3: Study and Practice
Never stop learning. It doesn’t matter how good you think you are, there is always information you can pick up that will improve your trading. When you decide that there is nothing left for you to learn, that is when you will start losing money.
All the great forex traders will continue to attend seminars, read books, and learn from peers or mentors. If they still think they need to learn, so should you. But when you learn something new, learn to apply it immediately. Nothing is worse than a profitable idea sitting dormant in the back of your head.
The quickest way to become a successful forex trader is to learn from a mentor. Seek out people you know that have experience in this field and learn from them. Their real life experience will beat anything you read in a book. If you don’t know any mentors, that’s okay. There are some good training programs with proven track records that will guide you through the details of becoming a successful forex trader.
Remember, it takes hard work and diligence to be successful. Forex for beginners is a tough place to navigate around, but if you’re willing to educate yourself and take the time to practice, there is no limit to the success that you can achieve trading forex. Do not let your initial failures deter you. Continue to learn and you will eventually be successful.