10 Things I Wish I Had Known Before I Started Trading Forex
Have you been contemplating trying your hand at forex? Think it's likely you have what it requires to be successful? Don't fall in the exact same traps that so many before you have fallen into. Obtained from successful and yet-to-be successful traders from throughout the world, and some from my own book of forex blunders, listed below are 10 things most wish they'd known before they began to trade foreign exchange. And if I may be so bold, print this out and hang it right beside your personal computer monitor!
Make Money with a Practice Account First. Don't trade a single penny of your own money until you've had ample experience with a practice account. I first began trading forex in college and thought I was smarter than the hundreds of men and women who had failed before me. I did open a practice account but apparently thought I was ready to trade for real following a short three days. I've come along way since that time, but that mistake cost me a tiny fortune to a college student. It translated into many missed nights out with my friends as I slowly tried to recoup what I had lost. Had I known what I really do now I would have used a practice take into account a month or even more, gotten confident with my strategy, and wouldn't have lost monitoring of orders which should have been canceled because they certainly were no more valid. You won't generate income during that point, nevertheless you won't lose money either, and that's half the battle. You'll find that out soon enough the hard way if you don't heed this important advice.
Trading With Real Money is Different. As much as opening a practice account is good, trading with real cash on the line is different. Try as you could to trade the exact same way with real cash as you did with pretend money, the reality is so it just isn't the exact same when you've actually got something at stake. Seeing your account increase or decrease with each pip can be studied in stride when playing for fun, but can be excruciating when it's your hard-earned money on the table. One of the ways that helped me overcome this is to consider each trade as the price of doing فورتيسيو business. For instance, a small business might spend money on an ad which can be either going to make them money or it's not. In either case, the cash spent on the ad is fully gone, so you need to have done your research before spending the cash to determine if it absolutely was a good idea. It's much the same with forex. Once you place a trade with a stop-loss, consider the cash in danger the price of doing business. If you are not prepared to reduce it, then you need to think hard about taking the trade in the first place.
Forex is just a Mental Game. There is a psychology to trading. You can find mental and emotional states that can help your trading, and ones that can be hugely detrimental. That you do not trade when you yourself have been put-off by way of a loss and are searching for vindication, nor can you trade when you've come off a win and you think you're invisible. That you do not trade if you are bored and you've got an itchy trigger finger, nor if you are tired, having a bad day, and especially not if you are contemplating just how much you will need the money. Trading with dollar signs in your eyes will result in taking trades that you shouldn't. Mindsets like these are a recipe for disaster. I thought I was a pretty even keel, more pragmatic than most, and level-headed. I didn't think I was going to be susceptible to the emotional side of the game. Here's what I wish someone had explained: Expect you'll be emotional, but understand that not keeping constantly your emotions in balance will undoubtedly be your demise.
Don't Lament the One that Got Away. Don't lay on the sidelines watching some grand move on the market wishing you're in the trade. Chances are you'll convince yourself to get in and you will get burned. It's like attempting to catch a falling knife; allow it to fall. Watching a set create a big move that you missed is hard. Expect it to be. It sucks. But watching the pair go and contemplating getting back in is like attempting to cross a one-way street by looking the wrong way. Watching cars pass by and seeing big gaps in traffic where you could have crossed provides no insight as to when you can cross. Just because you are looking at a painful gap in traffic which was definitely would have given you ample time, doesn't mean there's not really a transport isn't yards away. Train yourself to look another way. Look at what's coming, the setups that are developing, not those who already developed. Begin to recognize if you are looking the wrong method down the Forex street, and force yourself to believe differently.
Plan the Trade, Trade the Plan. Have a trading plan before you press that buy or sell button. Know at what price you'd like to get in at, just how much you're willing to risk, and where you'd prefer to see the price go. Know why you're having a trade, and realize why your stop loss and target price are where they are. If you don't know why you're having a trade or don't know ho wot plan a trade, then you've got more understanding how to do. Just make sure you have really a clear knowledge of your trading strategy before you begin.
Have Respect for the Profession. Professional traders spend years in school, have mentors and use other professionals in the field, and have probably the most advanced tools and software at their fingertips to simply help them perfect the skill of trading foreign exchange. Don't expect following a couple of months of trading that you realize even a portion of what these guys know. If you were to think you've got it all identified how you possibly can make a million dollars in the next 3 months on forex, think again. Trading forex takes some humility. You are a tiny fish in a large pond. Did you realize that professional traders have a track record that usually just above 50 percent? Meaning they make winning trades approximately (on average) between 5 or 6 times for every single 10 trades they make. That is because of what's called trade management. Stop losses and targets are intelligently placed so that while they may lose 50 pips on a losing trade, they make 150 on a profitable one. If you can certainly do that 50% of that time period you're making money. Don't waltz into the forex world thinking you are able to change the overall game or be that one in a million that can create a few uninformed choices and you receive luckily. Don't think you've got it all identified or have an edge on the guys who create a career out of accomplishing this. It's that slow and steady that wins the race.