Any aspiring forex trader
should take time to familiarize with the aspects involved in forex trading. Trading may appear easy; however, it is not.
Although, people earn a living through forex trading, losing money is easy.
Therefore, a newbie in forex trading is advised to use demo trading before he/she
starts live trading.
Some traders argue that
demo trading does not allow a person to trade with discipline as one uses demo
money. They maintain that beginner traders may end up failing in the forex
trading as they may not have the discipline required to succeed in the field. According
to them, when one is trading with virtual money, they do not mind about the
losses they make. Hence, there is room for mistakes such as taking positions
with trade setup and taking positions with no trade setups. People using demo trading may also end up
over-trading which may become a habit.
Nevertheless, I do not
agree with these sentiments as demo trading has major benefits to any novice
trader. You are likely to adopt bad habits from demo trading in case you are
not a serious forex trader who does not care if you lose. However, if you are a serious trader you have
a high chance of learning a lot from demo trading. Every novice trader should
take demo trading serious for them to benefit in the field of forex trading.
Demo accounts enable a person to use virtual money to trade in an idealized trading environment. One has a chance to practice the concepts of trading without losing real money. A new trader can also test new and unproven trading approach.
Demo trading is a good
way to save money, time and effort.
Saving
Time and Efforts
In trading, your time
invaluable and most traders cannot trade the entire day. Demo trading allows a
trader to practice and prepare themselves for live trading. Hence, a smart trader should take time to
demo trade. Many brokers would advise you to open a live account as it is the
way they make money. However, you may find yourself using a lot of effort due
to a lack of familiarity with forex trading. You may end up getting stressed
due to losses and even doubt your ability to trade. A new trader may end up quitting forex
trading due to such reasons.
Save
Money
Trading should be a
long-term goal rather than a short-term objective. Hence, practicing using demo
trading is a sure way for a first-time trader learn. Training for 3 or 4 months
is a short time for any person focusing on forex trading as a long-term
objective. There is a high chance that if you trade on your live account you
will experience huge losses. You might end up losing hope and abandoning forex
trading as a whole.
Demo trading is meant to help a person become a profitable trader before they trade in their live account. Some of the brokers offer Risk
and Psychological Factors
Many people aspire to become the best traders but the reason they do not become is that they are afraid to take the first step. Anything you do in life is a risk including eating or sleeping. If you do not change the way you condition your mind, and think about the risk and the failure you will never ever grow or start any investment. Take the risk and failure as just a part of emerging the best in every business that you venture into. With this mindset, you will never ever be discouraged in what you do.
The first step of becoming successful trader is taking the first step of imagining yourself becoming the best forex trader. You cannot become what you are not conscious of. You must feel yourself successful mentally even before you start the business. The worst thing is that many people starting a business focus moreon the negative part of it…… what if I get scammed what if what if, my friend, it’s good to have fear, but fear is opposite of faith. Fill your mind with success thoughts, see yourself making it, if there are millions of people who made it why not me? Never ever block yourself by saying it’s not your thing, but you really want it. You have to understand that you are not you, but God/Universe within you will ever be your guide. We should never wish to be good traders but we should always focus our attention on being the best and feel it. What I mean by feeling it is, just assuming what you aspire to be is already a reality.
Never ever say trading is
hard, or say it’s not easy for them make such money, they must have cooked
those results or it’s just a demo. Never ever say forex trading is like gambling,
never ever criticize what you really want to be or have. If you change your
tone of how you think about forex trading you are on your way of enjoying the
freedom and income that comes with trading. Many newbies or advanced traders
who speak ill of this business will never make it. It does not matter which
strategies you are going to use. In fact it’s not the strategies that makes you
a good trader, it’s your mind.
If you can train your
minds to see good anything that you desire in life, feel it and always keep on
visualizing it, you will become the best trader believe it or not. What I am
giving here is out of my own experience. I totally disregarded the illusion of
forex being hard to me, and persisted working on what I really want, and today
I can comfortably say it works.
Points
to consider before you place a trade.
Every morning after you
wake up just before you start your day remind yourself why you are trading, why
is this important to you? Why are you doing this, why you want to be a
professional and profitable? etc, try to answer your why? This will help you in
building emotions that will propel you becoming a professional trader. Without
feeling of success, of freedom of making good income and happy with that, it
will be hard for you to trade forex for a long-term. Never ever in any given
time allow negative thought about forex get a place in your mind, always
replace that by affirming that you are the best trader and you are getting the best
income and the freedom you truly deserve.
Before you place any trade,
visualize it going into your direction and triggering your take profit, never
ever see it going on the other side. Just pay more attention on what you want
not what you don’t want. Try to imagine what you visualized is already a
reality and build emotions of feeling good, a pro, successful, confidence etc.
Note better, you must feel it.
Do not let people’s
opinion about what forex is become your reality. Just take it as a mere words if
they are not helping you in anyway. All social media which encourage negativity
about trading get out of them, do not get a confirmation from any one of how
hard forex is because it’s not true. Never ever comment a negative comment about
forex trading.
Rely on your way of
thinking, do not get influenced to get into a trade that does not met criteria,
just wait and another trade is on the way coming for you. This will eliminate
FOMO, and increase your patience to wait only for the best set ups that align
to your strategy. Do not just say you are lucky, you better lose when you have
100% followed all your trading plans than win out of luck. You should know that
trading is not a short term business but rather a long term investment.
Lastly, have a mentor. If
you are truly serious of becoming the best trader, having a mentor will help
you to stick to one strategy given by your mentor. Do not ever say that your
mentor is just there to take your hard-earned money because the strategy seems so
simple and its like cannot work for you. Everything is simple in forex, it’s
just about how you are conditioned to believe. Mentor will also help you to
reduce the time taken in mastering all the concepts of trading. Every strategy
will always generate money, if it has been repeated for a long time until you
develop instincts. It’s not about knowing how to trade (conscious) you also
need your subconscious mind to help you on this. You cannot study all of the
forex strategies but if you practice just that one for many years its better
than trying million strategies.
If you just follow the
few concepts in this article, you are on your way to making enough income for
you from forex. You are the best trader, all successful traders once were like you.
Just focus on that one thing of making it, disregard all the negative talks
about your journey and soon or later………
A major problem with most
aspiring traders is that they lack an understanding of how to grow their
trading account. They have an end goal
of owning either a large account or simply a small one. However, whatever their
goal is, growing an account is possible and an efficient way of earning a
living. There is no specific way of growing your trading account, nevertheless,
there are different points that one can consider.
Let’s explore some of
these points and learn how to boost your forex account in an efficient way and
quicker.
Account
Funding
Keep in mind that in
forex trading you should consider the percentage of capital you are prepared to
chance. The amount of capital you invest is relative to your profit. Hence, if
you invest large capital you generate more capital. Let’s give an example of an
account which is worth $1,000 and you have a return of 5% per trade. In this
case, you will generate up to $50 every time you win and lose the same. With
such percentage of what you are okay to risk, you do not have to overleverage
your account. In fact, I would recommend a leverage not more than 100 if you
want to be in the industry for a long time. Newbies think having 1000 leverage
is your way to make money. Let me explain what leverage is in a simple terms.
Leverage is the money your broker lends you. That is it allows you to either
place a big trade or multiple of them that your original capital could not allow.
Do not take leverage as a way of making millions. It works well to experienced
traders because they can raise just a small account from like $100 to $1000
within a month.
In this case, you need to
invest more money into your account for it to grow quickly and
effectively. Nevertheless, one may
encounter issues. Therefore, if you are a beginner it is important to start
small when trading lives.
When you start trading one
should add capital to the account every month. As it is better to start small
and reap great benefits later rather than to invest all your savings and suffer
psychological issues in case anything goes wrong.
Overtrading
Overtrading can either be
steering off from your trading plan or lack of a plan. At times trading can be compulsive
as one seeks to make profits while ignoring the losses. One can also be overconfident
thus opening more trades than they can handle thus causing more harm than good.
In most cases, traders who end up not making money in trading are overtrading.
As a trader, it is important to be conscious at all times and avoid taking
every potential trade. Overtrading can have a grave impact on the growth of
your account. One thing that every beginner should keep in mind is that even
though our goal is to grow an account, we also need it to be efficient.
Overtrading tends to affect the account’s efficiency if not taken care off.
Apart from over-confidence,
overtrading is caused by one’s behavior. As a trader seeking to grow your account,
it is important to understand psychology and ways to suppress some behaviors.
For instance, one should avoid disposition effect, whereby, one holds on to
losing positions for a long time while cashing winners at a fast rate.
A trader should avoid
over-analyzing to be able to grow a trading account quickly and efficiently.
Some traders tend to overanalyze positions and regularly monitor positions. It
may lead to one making bad choices such as overtrading.
Risk-to-Reward
Ratio
Risk-to-Reward Ratio is
the calculation of the amount that one is able to risk in a trade versus the
profit target. Every trader needs to understand RR as it is significant in
growing the trading account quickly and efficiently. Its approach involves
looking for opportunities where the rewards are more compared to the risks. If
you have more possible rewards you have a minimal chance of having more failed
trades than your account can handle. A trader seeking to grow their accounts
needs to use a good risk-reward-ratio by putting the odds in their favor. One
should have a minimum RR of 1.5. In case you have a potential setup that gives
you a 1.3RR, it cannot qualify for a trade entry. Therefore, it is important to
make sure that you do not go below 1.5RR. One reason that you should ensure your RR is
1.5 is that you just need a win rate of more than 40% to be profitable.
However, with the 1RR minimum, you may need to have a win rate of more than 50%
to be profitable. With a 1.5RR minimum, one requires to win 2 trades in every 3
losses to cover their loss. A trader will have less pressure to win all their
trades. Thus, you will have the opportunity to trade at a higher level.
As a trader, you need to
understand that it is important to protect your capital as it will allow you to
grow your account fast and efficiently.
Trade
Multiple Time Frames
Every trader has their
trading approach that they feel comfortable with. Despite this, flexibility plays a major role
in trading. Nonetheless, a trader should focus on trading on multiple time
frames especially when one is focusing on growing their account fast. The
approach allows a trader to learn more about trade setups. It will open up various opportunities that
will allow you to separate great trades from good trades.
With this approach, you
will have an opportunity to grow your account quickly and efficiently.
Consistency
Being consistent with your
account is a good approach to growing your trading forex account quickly. In
most instances traders loose hope and rarely take time to check their charts.
It is important to constantly check your charts and do not let losses deter you
from trying. Every day small decisions allow a trader to develop a constant
level of development and minimal chances of huge setbacks. You do not need to spend the whole day in
front of your computer trading, instead, you can take small steps such as
checking your charts once per day. It will allow you to keep updated with major
pairs. Also, it is important to have rules that will enable you to be
consistent. You need to consider setting rules that match your personality. It
will help in ensuring that you are not affected emotionally while trading. For
instance, you will not have to spend more time thinking instead, you will spend
time making the right decisions. You
will understand the mistakes that you have made in the past and focus on avoiding
them.
Hence, consistency
involves having a working plan, which will help in growing your account quickly
and effectively.
Many traders jump into the live forex business and lose money almost suddenly due to the desire to use huge leverages to make quick money. There is a reason why the demo link is there for new entrants in the market to keep playing until you become consistent as a demo player. Thereafter commit the trading capital on a live game.
The Forex or the Forex trading market is in so many ways similar to equity markets although with notable differences. By knowing, the differences between the two will help in understanding and getting started in forex trading.
Choose the Best Forex Broker
With so many forex brokers to choose from, please mind the following:
Low Spread
Spread is a calculation done in pips, which brings in the difference between the price of the currency value and its selling price at a particular time. Forex brokers do not charge commission so their earnings come from spread difference in forex trade comparable to the commission in the stock market
The lower the spread the more money you save.
Quality Institution
Forex brokers are linked to large banks or lending financial institutions because of the large trading capital needs. The Commodity Futures Trading Commission (CFTC) should have a list of dependable forex brokers whose activities are regulated by the Future Commission Merchant (FCM).
Extensive Tools and Research
Forex brokers can help in many trading platforms the way brokers deal in the stock market. The trading platform may feature real-time charts, tools, news, technical analysis, and date that support the trade. Before making up on your mind on a particular broker, ask for a free demo test on different trading platforms. Brokers will offer technical and fundamental information and economic calendars.
Look for a broker who with the right tools for forex trade
Wide Range of Leverage Options
Leverage A leverage is a necessity in the forex because of the unstable price value of the currencies. Leverage always expressed as a ration between capital raised and actual capital, which translates to the money a broker, will lend a trader to start trading. For example, a ratio of 100:1 means that the broker gives you $100 for every $1 of the capital spent. Many brokerage firms have a leverage ratio of 250:1 but have it in mind that the lower the leverage the lower risk in a margin call.
If you are a beginner and intend to start trading in forex but with minimum trading capital, look for a broker with high leverage ratio options. Different options are available to give you an option of varying the risk you want to take. If for instance, you go for a trading option with less leverage it means you will encounter fewer risks but highly volatile foreign currency pairs.
Type of Account
Brokers will give different types of accounts to trading clients. The smallest one is the mini account that requires the trader to use a minimum amount of $250 that offers the high leverage. For a good win, you need such leverage to make money that corresponds with the size of the initial capital. An account that allows traders to invest using different leverages with a minimum of $2,000 is the standard account. Then you have a premier account that requires higher trading capital and lets the trader use different amounts of the leverage ratio. The trader on a premium account will receive more tools and services for trading.
A broker should be aware of all the accounts and respective leverage options, services, and tools that relate to the trading capital on offer.
Actions to Avoid When Using a Broker in Forex Trading
Sniping or Hunting
The buying or selling of forex near their selling points prematurely is a common act committed by brokers hoping to raise their gains. The only way to find out if a broker is sniping or hunting is to talk to other traders because there is no blacklist a body that handle such activities.
Thorough due diligence is recommended when looking for a reputable broker
Strict Margins Rules
When trading on borrowed capital, the broker will decide how much to stake. This gives the broker the power to buy or sell at will. This may ruin your reputation. Take the example of a trader who stakes on a margin account, which later on takes a positive gain with enough cash to recover debt, the broker, will decide to liquidate the account on a margin call thereby losing a significant amount of capital. Owning a forex trading account is more or less the same as a trader seeking to have an equity account. The difference between the two is that for the forex, there has to be a margin agreement. The contract states your interest in trading with borrowed capital and the broker has the right to intervene in the trading process for his benefit.
You need to fund your account and start trading.
Defining Basic Forex Trading Strategy
n the forex market, the most used approaches in the business are the technical and fundamental analysis. Individual forex traders prefer to use the technical analysis, but the article looks at both.
Fundamental Analysis
This analysis is complex in nature because its value is based on looking at the whole aspect of trading on long-term predictions. Some traders prefer to trade on short-term relating to new opportunities. The fundamental indicators the value of the currency can be seen in the following forms:
Non-form payrolls
Purchase managers index (PMI)
Consumer price index (CPI)
Retail sales
Durable goods
The above documents are useful in situations that commentary can affect markets. Meetings may involve discussions on inflation, interest rates, and issues relating to currency valuation. Any simple change in the wordings, comments by the Federal Reserve chairperson on rates can also cause some shifts in market volatility. The most interesting meetings to look forward to are the ones held by the Federal Open Market Committee among others.
By reading and examining reports on forex trading commentary gives traders a clear knowledge of long-term trends in the market and enable the short-term trader to gain from unusual trading events. Have an economic calendar to get updates of all the reports as they are released, you can always use a broker to get you the information in real-time.
Technical Analysis
Analyzing the technical aspects of the trade goes into areas such as price trends. Technical analysis in forex trading requires a set time schedule because the forex markets run on a 24-hour basis. Documentation related to technical analysis include
The Elliott Waves
Pivot points
Fibonacci Studies
Parabolic SAR
Analysts who prefer to use technical skills get accurate predictions, which involves the combination of Elliot waves and Fibonacci studies. A set of traders will create a trading system that locate the same buying and selling with the right conditions.
Finding Your Forex Trading Strategy
Successful traders must have a working framework and through experience make it perfect. Depending on the areas of interest, some will focus on the wider spectrum to look at trade as the rest study one specific task. The combination of both the technical and fundamental analysis for long-term projection note entry and exit points.
At the end of it all, traders make the final decision even when it
Forex Trading: Factors to Consider
Open a demo account up to the point of consistency in trade and profit making. Avoid getting into the trade and rush to place positions without proper knowledge of forex trends.
Delink emotional attachments and maintain mental alertness at all times by introducing a trading plan. This trading plan should be the one guiding you the reasons why you should consider a certain setup.Before jumping in,ask yourelf,does this really meet my criteria? Write down all what you look at and then participate in the trade.
Study the trend with good intentions and only trade when the trend is your friend.A trend will always depend on the timeframe you are trading,but not rigid to a daily trend as many people trade to say.
Finally
The forex trading environment is now a big scene in the world and traders try their luck in the business. However, the considerations you have to go through are well explained including the reasons to wait a little longer before you start trading. Make sure your broker has a good reputation and get a due diligence report about the broker before using that broker. Meanwhile, learn forex trading by opening a demo account and trying it out.
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“I Wish You Well In Your Journey & In Your Trading.”-
