How To Become A Forex Trader
The following is the exact road map of how to become a Forex trader
, a successful one. Lets see how.To start with, forget the crap you have read so far. For sure you have heard that you can make a very good supplementary or even full time income trading the Forex Market.
However, unlike what is promised in each and every product that is released nearly every day, the expectations are most of the time super exaggerated. You can make money consistently but it is not as easy as one two three. If this is the case then there will be no Forex market at all!
It is imperative that you learn the basics of Forex Trading. Yes, education is the key. Before you start trading you need to learn the basics of Forex trading. You have to learn the overall mechanics of the market, the terminology used and lots of other important things that you need to know and understand.
Your next step then is to open a demo account with any broker that you like. At this stage the reliability of the broker is not important since we will only be practicing with demo accounts with no real money. You have to learn how to use the trading platform (Metatrader 4 being the simplest to master).
Doing so you will also consolidate most of what you have learnt in the basic training, like for example different order types, pip values, stop losses, market behavior during different times of the day and lots of other things. This is in fact a very crucial part to learn and understand how things from theory are seen in practice.
At this stage, refrain from opening a live account for the time being. It will be extremely tempting to open a live account and start trading with real money particularly if while playing around with your demo account you managed to grab some profits. Please do not waste your money since there is still a lot to learn.
Entering a trade where the decision is based solely on gut feeling and where your trades are not planned ahead it is simply the best way to ruin your account. What we mean by a trading plan? It simply means that we have clear exit points for our trade irrespective if the market went in favor or against us.
Now it is the right time to search for some basic trading systems. For example in popular Forex forums you will find a lot of profitable trading systems. Quite a number of people post trading systems with clear entry and exit rules and most often than not, they also post the performance of the trading systems in question. Then just apply and trade them in your demo trading account.
Practicing at this stage these trading systems makes you experience the behavior of the market. It is also recommended to stick to one or two currency pairs since every currency pair has its own personality hence different behavior. EUR/USD is the best currency to start with.
Reading through the forums and trying different trading strategies, indirectly you will start learning technical analysis which is the study of price action for the currency pair that you are trading.
There is quite a lot to learn on technical analysis and learning is the main key to become a successful trader. The study of pivot points, trend lines, reversal chart patterns for candlesticks and bars and the use of traditional indicators are just a taste of what you have to learn.
In the mean time keep demo trading the trading systems that you are comfortable with and keep learning! When you are consistently profitable and you have full confidence in the trading systems that you are trading then move on to the next phase. This step may take you months to go through.
Just to make this clear, if you are profitable in a demo account you should have an efficient money management strategy in place, you are disciplined and you strictly obey the trading system rules. Money management and discipline are extremely important to become a successful trader together with some simple but profitable trading systems.
Now it is time to search for an honest reliable broker and open a live account. Start small and only deposit money that you can afford to lose.
Is it time to start making real money now? Unfortunately you have the last enemy to beat your mind! Hopefully now you realize why I said When you are consistently profitable. Now you will be trading live with your own money, and here your mind can play dirty tricks.
You may be afraid to enter a trade, or you will not have the courage to close a trade with a loss, or you get greedy and many other things. The worst thing that can happen is that when you start trading live, the system goes through a losing run.
If you do not have confidence in the trading system, you quit trading or search for another trading system. This is exactly what many traders do. They keep looking for the perfect system and no perfect system exists. This is why we have money management and discipline in place. These safeguard us traders when things go wrong.
Then again, if you have confidence in the trading system, you know that this is a rough patch and profits are just around the corner. You know this because you were patient and demoed the system for months! You should appreciate now why demo trading is important and it is the main reason why many traders lose money and others make money!
Learn, build confidence in the trading systems and take all the time you need since the Forex Market is here to stay. Once you go through this route map just provided, you have just built an online ATM machine with infinite money in it. Trust me, this is how you can become a successful trader.
Copyright (c) 2010 Jason Pace
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