Learning to trade in the Forex market isn't terribly difficult. BUT it does take a lot of practice, studying, focus, dedication and discipline to know how to TRADE FOREX SUCCESSFULLY.
Let's think about it in these terms, people trade all the time. We trade our services, food, toys, crafts and various other things for money (or some other form of gain). People trade to earn money to properly live their everyday lives. So in a sense you've been practicing to trade in Forex for most of your life!
This is at its core what you do at your job, as an employee you trade your time for the work you do daily. This is also what we do when we start businesses, invest in real estate, and trade and/or invest in the financial markets. We all need financial independence to ensure that we are able to provide a comfortable life for our families. Learning how to trade Forex successfully, can be a catalysis to that lifestyle. I emphasis successfully because there is a such thing as unsuccessful Forex traders.
Learning to Trade Forex successfully will give you unlimited earning potential. Even if you currently work 40 hours or more at a day job. The market seemingly lends itself to unlimited trading hours, so you can learn how to trade on your own schedule. With the market being open 24 hours/day 5 ½ days a week you have the ability to make money at almost anytime of the day. Which is why if you are considering making money aside from your day job, learn how to trade Forex is the perfect side hustle. You can trade in your spare time and still have the potential to become very, very profitable.
Forex Trading is a skill
Surprisingly, most people don’t understand how Forex works but yet they are still interested in trading in this financial market. Which is probably what lead some of you to search this topic. The way I see it, why wouldn’t you want to trade in the largest, most liquid financial market in the world, I mean the income earning potential is HUGE! But it is important to learn to trade Forex successfully! Trading well is much more than prices going up and down. A Forex trader must know how to read and setup charts, technical and fundamental analysis, money management, mindset and psychology. It’s crazy how there is so much to learn and yet trading is such a simple act.
The great part about learning how to trade Forex successfully is that the Forex market is not bound like some other markets. It’s a liquid market, which means it’s easier for you to make your trades, meaning easier to buy and easier to sell. It’s also easier to reap greater financial rewards. The Forex market operates 24 hours a day 5 ½ days a week with no centralized location unlike other financial markets. It involves all the currencies in the world and trillions of dollars are being exchanged every day in this market. Making it the world’s largest and the most liquid financial market in the world. Daily trading volumes are over 5 trillion dollars US.
Huge Earnings means Huge Risks
The Forex market offers traders a promising way to earn money. One of the best things about becoming a Forex trader is that you don’t have to have a bank account like that of a six-figure athlete in order to trade. You can begin with a small amount and by using leverage; you can easily make up to ten times the amount of your initial deposit. So, for example, you would need to open up what is called, a margin account and that is usually done through a broker. And then let’s say you want to trade Forex in the amount of $5,000. So, you would need to deposit at least $500 in your margin account if the margin was at 10%. To trade Forex successfully, you have to understand that leverage is and how to us it. The short definition, leverage is money the broker is giving you to trade Forex. This method is used to trade Forex by many investors with great success.
However, Forex also has its risks and it is a fact that people lose money trading in this market. But, there are also people who became millionaires in the Forex market in what seems like overnight but it’s really not. Even though all it takes is one great trade to change your life!
Before I give you the steps on becoming a successful Forex trader, let’s make sure you have a basic understanding of how trading works in the Forex market. Forex is the buying and selling of currencies. In simpler terms, you, as a Forex trader, will be purchasing one kind of currency in exchange for another kind of currency. Forex currencies are traded in pairs. In essence US dollars for Euros.
If you traveled to another country, chances are, you traded your currency against the local country’s currency to enable you to buy things from that country. If you did this, you have a basic idea on how Forex works.
Steps to become a successful Forex Trader
If you want to trade in this ever liquid market please consider the following steps:
- Seek high quality education. Education is the key to begin trading in the Forex market. Getting a good education about Forex trading will let you increase your chances of profiting and decrease but not eliminate the risks involved. Without the proper knowledge of Forex trading, chances are you will end up losing money. A good education will enable you to trade in Forex more effectively and increase your chances of earning a considerable amount of money. It is even known that many people have quit their day job to concentrate in Forex trading.
Proper education includes but is not limited to: how trades are executed, learning how to read Forex charts, how to properly apply technical analysis, how to use fundamental announcements properly, proper risk and money management, understanding slippage, leverage, and spreads.
- Setup and practice on a demo account. Another key to becoming a successful trader is to practice your trading strategy using virtual money. Trading on a demo account will allow you to develop a sound strategy and help you work out your style of trading.
- Create and follow a detailed trading plan. Successful traders have a trading plan that is detailed yet concise, clear and covers as many trading scenarios as possible. This is your business plan. Your trading success depends on this document.
- Focus on taking good quality trades. Never force a trade. Successful traders look for high probable trading opportunities. And only enter in a trade if it follows all of their trading rules.
- Use leverage to your advantage.This is part of good money management. Leverage is gift and a curse, utilize it wisely. Learn what leverage is and how it is calculated. Check with your broker regarding leverage amounts allowed.
- Never risk more than 1% of your account value. This part of good money management. Successful traders protect their capital. This achieved by imploring reasonable risk reward ratios.
- Earn the right to increase your lot size. This is part of good money management. By using the philosophy of earning the right to trade at higher lot sizes you will be protected from dramatic losses and possible margin calls.
- Never be a greedy trader. Successful traders write out a detailed earnings goal. Have it written in your Forex plan as part execution strategy, how long you expect Forex to help you to achieve your financial goals. While keeping in mind you have to make your earnings expectations gradual and realistic. Follow your earnings schedule. Learn to “read” the market and take what the market is willing to give.
- Keep a trading journal. Successful traders make detailed notes about their trades. Recording information pertaining to each trade that includes but is not limited to price action, pairs traded, date, time, market sentiment, and emotions felt during the trade are very beneficial.
- Review your trades. A successful trader reviews all trades taken during that week. Understand why a trade worked or didn’t work.
- Have patience. Like any skill that you learn it will take time to perfect your craft. You will need patience when understanding the nature of Forex trading. You will need patience when looking for a great trading opportunity. You will need patience when waiting for a trade to close out. Patience is pivotal to trading success.
- Be Disciplined. A Successful trader is diligent about being a disciplined trader. Follow your trading rules—NEVER BREAK THEM. Don’t take trades you haven’t thought out and understand.
- Stay the course. A successful trader is a trader that is prepared to take the journey. Forex trading is not a skill you can learn overnight. There will be losses but there will be gains and the gain could be HUGE so stick with it and you will become a successful trader.
Thanks to the internet and the advancement in technology, everyone can trade in this financial market. Unlike in the past, when only the multi-national companies and financial institutions, such as banks were the only ones allowed to participate in the Forex market.
Trading Forex is relatively simple to start. All you need is a computer with an active internet connection (high speed internet), a funded Forex account, and a trading system. Once this is in place follow the 13 steps above and unleash the successful trader that you are.
Always remember beside the fact that Forex high earning potential the risks involved are equally as great!