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Many people think of trading as a dry affair, but it is really more like an art that takes long practice. Do not believe the advertisements offering a steady 20–30% a month on nothing more than a small stake such as 100 USD and imagine that life will be rosy: forex is a speculative channel that can produce a profit, but that can also lose money very fast.
To understand the matter properly, though, you have to look at it from several angles, and getting there is a long and arduous process.
Below are a few lessons from experience to help you invest in forex successfully.
Find yourself a reputable forex broker to trade with
There are countless forex brokers today, large and small, of every origin: British, Australian, Japanese and more.
It is exactly that variety that leaves a new trader feeling lost in the “jungle” of brokers, with no idea which one to trade with.
To find a reputable broker you can ask experienced traders, but it matters more to check for yourself: which regulator the broker is licensed by, whether the license number can be looked up on that regulator’s own website, which legal entity your account sits under, and whether a small withdrawal goes through when you try one first. See also: How to choose the best forex broker to trade with. You have to keep your wits thoroughly about you when a forex broker lays some small benefit in front of you, such as a handful of dollars for opening a trading account.
You should read the applicable terms carefully, and even having read them carefully you will find it very hard to actually win that promotion from the brokers. The reason is simple: you have no real battle experience in the market yet, and all of it is only there to draw newcomers in.
Keep your wits thoroughly about you with brokers’ promotional games. Not every forex broker that runs a promotion is reputable, and not every forex broker without a name is disreputable. Keep this firmly in mind: trading forex through an overseas broker in Vietnam is not at present recognized or protected by law, so if you run into a fraudulent broker you have almost no way of getting the money back.
Keep working on your Forex trading system
Building a Forex trading system is regarded as the most important part of the work for a trader. A good trading system needs clear rules: when to enter, where the stop loss goes, where the take profit goes, and what percentage of the account is at risk on each trade. The first aim is to protect your capital and to trade consistently; profit, if it comes, is the result of that process.
Every line of work calls for its own qualities. In forex, to become a good trader you need to bring together qualities such as discipline, because discipline is what keeps you doing what the plan says. You also need to think clearly, you have to think clearly in every situation in order to build up knowledge and trade successfully. Beyond that, for long-term success you need perseverance in order to invest in forex successfully, perseverance from the moment you start studying, perseverance from small investments through to large ones; these are the essentials.
Health is a crucial matter for anyone as well: good health means a clear head. That helps you concentrate on the work and cuts down on the wrong decisions that come from being tired. Alongside that comes humility, since the store of knowledge is endless, and the forex market in particular has a body of knowledge that keeps changing, along with the market’s own ceaseless shifting.
Remember that becoming a leading expert in forex is a long journey of studying and of polishing your skills without a break. Success does not come easily, but the destination is worth the daily effort; it is the deserved reward of the person who perseveres.
Find a teacher and learn the craft
There is nothing to argue about here: every trade has to be learned, and forex trading is no exception. Somebody with real experience, who has traded for years, will help you move faster in the early stage. But finding such a person is far harder than it sounds, which is why the section just below is about how to spot the ones who are only selling a course.
You can teach yourself, research online and take in knowledge that way. You may even read a great many books by the world’s greatest investors when you have only just stepped into forex trading. Everything has 2 sides, however, and this leaves you without an overall view or a clear sense of direction. Having a direction helps you sift the knowledge and choose the best paths for making your way in the forex market.
A mentor with real forex trading experience can save you the time that would otherwise go on floundering.
Be very careful, though: a great many “teachers” online actually make their money selling courses, selling signals, taking referral commission from brokers, or offering to “manage the account” for you. A mentor worth trusting teaches you risk management first, makes no promises about profit, does not ask to hold your account or your password, and is willing to show their experience openly. See also: How to spot scams in the Forex market.
Keeping a daily forex trading journal matters a great deal
Mistakes are unavoidable while you trade, so write all of it down in full: the market information, the political developments, the candlestick patterns, the trend you predicted, where you entered, where you exited, why you exited, where the take profit and the stop loss went, what the market trend was, which indicators work together and whether they suit your style. It can bore you stiff, but it is one of the most effective ways of learning from your own mistakes. See also: Why should you write a forex journal every day?
Keep a journal like that for a few months and you will see plainly where you tend to go wrong, which way of trading suits you and which does not. That is the foundation for progress, even though there is no assurance of any profit. If somebody with plenty of experience goes through the journal with you, you will progress faster.
Give it long enough
No trade makes you a success the moment you wake up and open your eyes; trading is a line of work that calls for more patience than most. You have to set aside a lot of time to study it in earnest. The market changes constantly, so every currency moves along with it, and what is right at one moment can be wrong at another. To get anywhere, then, you need real heart for wrestling with the mass of knowledge. In forex trading, the sooner you start studying, the better.
Worse still, many people come to Forex while they are in financial trouble, hoping this line of work will turn their life around. That is the wrong choice, however. Foreign exchange investing should only be done with money you have spare, once your personal finances are already stable. Pressure over money will make you trade recklessly, and you need a reserve so that a loss does not disrupt your life. Never borrow money to trade.
In short, investing in the forex market is not a fast route to wealth; everything takes time, and risk always comes with it.
