How To Become A Successful Forex Trader
Have you heard about the benefits of forex trading as a tool to create personal wealth?
Gone are the days when forex trading are meant for the "big guys" - institutions, big companies, banks and financial institutions. Today, the man-in-the-street can access facilities to trade in the privacy and comfort of his home! He can earn a living trading forex from the comfort of his own home.
If you are someone intending to be involved in forex trading, there is available a lot of help and assistance to get you started off. Let us consider 4 main guidelines that are important to you if you intend to make money as a forex trader.
Firstly, is forex trading for you?
Forex trading involves study and gaining skills to trade. Generally, a quick style of trading is needed for day trading of the forex. On the contrary, if you are someone who cannot spend too much time on the trading screen, then swing trading is envisaged. Both styles require you to spend time to study technical setups peculiar to these styles. Check your own risk profile. If you cannot tolerate risk that is opened for long periods, then day trading, which may involve trading within mere seconds or minutes is suitable for you.
Secondly, are you capitalized for trading forex?
With the advent of leverage, and min-forex, capital is no longer an issue in trading. Unless you are a swing trader, where you intend to open your trades for a longer period, you really do not need a very big amount of capital. This is more so because as a beginner to forex trading, you will start off small, and build up experience as you go along. Check with your brokers to comply with their levels of capital requirements, and check out the possibility of conducting mini forex trades.
Thirdly, are you going for a technical approach or a fundamental approach?
Most forex traders are technical traders. By this, they look at charts to spot any technical trading setup, and if prices have reached a certain level they would buy or sell as the case might be. Charts feature a lot on their trading systems. There are those who adopt trading signals based on fundamentals. This will include the news release, reports of economic trends, treasury news and so on. There are those who blend their technical systems together with news releases as well. No matter whatever approach you use, make sure you identify properly the proven profitable trading setups and concentrate on trading these until you are an expert.
Fourthly, be aware that forex trading can be a most exciting career move - you can earn a living trading forex online. Much as the rewards can be great, there is a learning curve to follow. You can accelerate your learning skills by following a structured course of learning forex or getting a mentor who is willing to show you his secrets and pass on knowledge of his techniques.
So be prepared to learn, spend time to paper trade your trading systems until trading is second nature to you and until you become a consistent winner even during simulated trades. Until you find that confidence and high win-loss ratio, continue to paper trade.
By following these 4 guidelines, you have the best chances to become a profitable forex trader.
How Long Does It Takes For You To Become A Successful Forex Trader?
Most people approach the need to learn forex trading with a measure of trepidation or fear of the unknown. For those who are undergoing a period of self education and instruction by gathering relevant training materials and tools, and practising new skills in the comfort of home, one common question of the unknown would usually linger in their minds : "Would my self learning be sufficient to make me a successful forex trader?". For those who have chosen to learn under a mentor, a common question is this: "Will the mentor reveal all his secrets to me so that I, as the understudy, can trade successfully on my own?"
Indeed, when will a novice trader be able to know exactly the timing of his metamorphosis from a learner to a skilled trader, and so that he can proceed to trade on his own?
There are some who believe learning to forex trade is an effort that spans an entire life. This group of people believes that learning and education never stops. A forex trader reacts to the news, and to his setups, and trading is always different every day. To this group, learning is a lifelong process. They would look at their trades daily, analyse them to see what made certain trades work, and why certain trades were failures. In this manner, they are able to extract good lessons out of bad trades, and would become wiser, never to repeat these mistakes again.
The main difficulty for this group of new traders is finding the most appropiate time for them to say, " I have learnt enough, and it is time for me to go into the battle field and to fight the good fight of the faith. I will start to trade!"
Speaking from the viewpoint of a trading coach and a professional trader, here are two suggestions.
Firstly, maintain a trading log even when you are learning to trade. This trading log will serves as your trading diary in which you record all your trades, even during the times of learning which may involve your paper trading or your testing of certain forex trading strategies. Record your personal experiences - why a simulated trade was taken, what was the prescribed action you should take based on the trade setup, and what was the outcome. In this way, you will be able to document and record your experiences, and be able to gain a high degree of confidence from seeing repeated results from taking certain stipulated action arising from similar trade setups.
Secondly, you can adopt a cut-off point where you can start to trade on your own when after a period of paper trading, you find you are consistently having a higher win-loss ratio. In other words, when you find there are more winners than losers in your simulated trades and this is repeated consistently as recorded in your trading log or diary, you can consider moving out to trade on your own.
Needless to say, in whatever self study, it is of the greatest importance that you find the most effective trading strategies and systems, and master not only the trade setups, but also your trading psychology, and be able to pull the trigger to trade. Learn from real traders, who are able to pass on their skills to you. You are there to trade, and convert the head knowledge into real trading skills.
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