Learning how to trade forex is not an easy feat. You can become a successful forex trader who engages and treats forex trading like any other skill. The reality is, it’s hard work and should be treated with the same seriousness as any other career.
In fact, many successful forex traders now have gone through a learning curve, including myself, this is only a problem if you refuse to learn from your mistakes.
They help each other at the start. Learn to think for yourself and understand that anyone can learn how to be a forex trader to be successful.
How To Be a Forex trader
Getting started with Forex trading is easy. All you need is a forex trading account with cash. Then you enter the forex market and start trading.
Being a forex trader is more work. You need to grow from the starting point with very little knowledge to the stage where you have a trading plan, understand the concepts and behaviors of the forex market, and be able to trade with a cool head and understand the profits and losses.
Learn how to trade forex by following these six steps as a forex trader.
Understand your place in the forex market
This is very important. You have to understand that you are a very small fish in a big ocean. In the forex market, most of the liquidity comes from large banks and experienced institutional traders. These are the close-ups. Big fish will love to eat you as a small snack.
You are only wrong if you think that it will be easy to make money from these great forex traders. You have to learn to swim alongside these big fish and catch the same current as them. Swimming against them only marks you as prey and sooner or later you will be eaten.
Learn to read Forex charts and understand the Forex market.
Many newbie traders believe that these great forex traders have access to a secret forex trading strategy or use a set of secret indicators, but the truth is, they don’t.
Start by accepting that the other top competitors have a lot of experience in the market and that they make money through experience and a deep understanding of basic skills, not because they have a holy grail of knowledge – secret indicators.
It is important that as a beginner in forex trading you understand that the focus is not on how much you can trade forex, but on how you manage what you have.
This is the most common fall for all newbie traders. It is common for a beginner to risk most of their account in one or two positions.
Focus on the market
Many forex newbie open their forex charting software, activate their current hot tool or indicator, and trade as recommended by the tools. This type of forex trading is unlikely to be successful in the long term.
Successful forex traders have been known with tools and indicators like Pivot Points, RSI, MACD, Fibonacci, Price Channels, etc. These tools do not of themselves make a successful operator. There are many successful and unsuccessful traders who use the exact same metrics.
The key is that successful traders understand how the market behaves in relation to indicators and what the signals actually mean.
Plan your trade and share your plan.
It’s a common saying that seems to get confusing among beginners forex traders. The goal of every trader should be to earn pips on every forex transaction according to his trading plan. Forex traders should treat every trade as a trading decision by calculating its risk and setting their entry and exit points which are not subject to large losses if a trade fails.
Many newbie traders seem to lack the discipline to follow a plan for each trade. What usually happens is the following; a newbie sees a potential setup, decides on a buy or sell amount with a quick estimate, then places the trade without risk analysis and with an exit strategy.
Your mind is your strongest asset but your weakest weapon.
First you need to understand the role of psychology in trading. You need to understand your personality traits and how they can affect your business style.
A trader I know is a sore loser, and when he has a bad trade, he would come back and try to recoup those pips with even worse results. But he understands this as a weakness and adjusted.