Let’s be honest. Many people would like to work only a few hours per week, have plenty of time to relax and follow their passions, while still making a lot of money. This is the dream for many people. And Forex Trading is usually advertised as a simple way to achieve this dream.
I’ve got good news and bad news for you.
The good news is that you can really achieve financial freedom and have plenty of time for yourself. The bad news is that the road to success is not a simple and easy one. It can actually be extremely complicated and you can easily get lost along the way. After all, have you ever seen someone succeeding in life without putting any hard work, effort, time and dedication? Why should Forex Trading be any different?
In this article, I am not going to sell you any dream. I want to show you the reality.
If you are ready for this kind of commitment, then let’s see the 5 steps to become a successful trader.
What is Forex Trading? How can you make money with trading? What is the best platform that you can use? How to find a good and reliable broker?
Yes, I know what you’re thinking… boring!
Garry Kasparov has been undisputed world chess champion from 1985 to 1993. He is considered a genius and one of the best players in the history of chess.
But the very young Garry Kasparov had to sit and learn how to play chess. He had to learn how to move the pieces and other basic concepts that he could use in the future to build upon and become a chess legend.
So you want to become a profitable Forex trader? Start from the basics!
There are a few free online resources, showing you how to start Forex Trading from scratch. My recommendation is Babypips.
If you can afford to invest in your education, there are more structured paths that you can follow. A book or a video course, for instance. They usually also contain the author’s experience and research. This filters the information, allowing you to study only what you really need to succeed.
If you are a fan of books, my suggestion is to have a look at “Forex for beginners” by Anna Coulling.
Since Forex Trading involves the use of many charts, video courses can be a great way of learning while interacting with trading charts. A good video course for beginners? I have condensed 14 years of experience in Forex trading in a 4 hour video course for beginners.
What I wish I could have learnt when I started my trading career is here: Forex Trading: Your Complete Guide to Get Started Like a Pro
Theory sometimes can be overwhelming. Think about driving a car. If you had to study that only with a book, you would see something like:
“Start the car by turning the key clockwise till it stops for 1 to 2 seconds. Once you hear the engine fire up, release the ignition key. Using your left foot, press the clutch down all the way to the floor and hold it there. From neutral, using your left hand push the gear lever all the way to the left and once it stops, push it straight up into 1st gear. Now place that hand onto the handbrake lever…”
All this theory and you are not even at half of the process of starting a car, let alone driving it by the street.
In practice, it takes seconds and, once you have gone through the same process a few times, you never forget it.
In Forex Trading, there are some concepts that you may find hard from a theoretical point of view. These same concepts are usually very easy to understand when we try to apply them in practice on our trading platform.
Some people may be worried about using their money to practise when they are still beginners. This is totally understandable.
Forex Brokers offer demo accounts, enabling you to simulate a live trading environment, without putting any real money at risk.
You have no excuses, this is your necessary second step!
“It’s not what you don’t know that kills you. It’s what you know for sure that ain’t true”
Mark Twain
Have you ever learnt something in the past that turned out to be wrong? Like the pronunciation of a word that you have used for years and years and only recently discovered that it was wrong?
Well, in Forex Trading, this kind of false beliefs may cost a lot of money. For this reason, it may be a very smart choice to interact with other traders and confront your ideas with theirs.
If you have an experienced trader who can help you and can answer your questions, then it’s great. This kind of solution is usually not free. Actually, many times it is quite expensive.
A valid alternative to it is to join an online community, where you usually find some experienced traders ready to help for free.
A few good communities I would recommend are:
· Forex Factory
· Babypips
· Trade2win
Trading sometimes can be misleading. Even if you flip a coin, you have almost 50% chances of winning (a bit less because of something called spread).
Since you have almost 50% chances to win a trade, you may also win a few trades in a row, even if you are a complete beginner without a strategy.
Although you may win a few trades just flipping a coin, it is nearly impossible to keep your profitability in the long-term if you don’t have a strategy.
How can you get a trading strategy? There are many ways:
· You can buy one. I share three of my trading strategies on Udemy, so you can start Forex Trading with one of them or you can use it as a starting point to build your own strategy.
· You can have a look at some ideas and turn them into a trading strategy. Online community, academic research, trading books… there are many places in which you can browse trading ideas and get inspiration to build your own system.
· You can brainstorm some ideas on your own.
Having the idea for a trading strategy is not the end of the process. It is actually only the beginning. You will have to define specific parameters such as entry point, stop loss, take profit, position sizing and so on. After that, you will have to back-test it, which means that you test your strategy with past charts to verify the solidity of what you have just built.
The process of developing a trading system is a mix of science and art. It will take time and it’s not easy. But once you come up with something that beats the market, the reward is often more than enough to compensate for your effort.
“That’s great! So once I have a trading strategy, is that the end of it? Am I ready to make a lot of money?”
It is just the beginning of it.
Having something that proved to work in your tests does not always translate to making money. When you start trading with real money, there are always some psychological barriers that you have to face sooner or later.
You will have months in which you will lose money, despite working hard. You will have trades turning from positive to negative in a few minutes sometimes. You will have periods in which you won’t see a single profitable trade.
How are you going to react to these situations? You may be surprised to discover that most traders lose money not because they don’t have a good strategy, but because they lack discipline during important moments.
Yes, sure. I know what you are thinking now. You are thinking that this will never happen to you. You really want to succeed so you are not going to make any stupid psychological mistake. Trust me, when your hard earned money is at stake, it’s going to be much harder than you can imagine.
“Don’t test the depth of the river with both feet”
Warren Buffett
Even if you developed a very promising Trading Strategy, my suggestion is to start Forex Trading with a small amount of money.
After a few months, you will have the necessary experience to evaluate your strategy in a better way.
What else after completing these five steps? You are ready to beat the market and be a successful trader!
Now you know how to start Forex Trading, it’s time for you to take action, but let me give you one last advice. No matter how good you are and how solid your strategy is, the market can always turn against you and your strategy. For this reason, remember to invest only money that you can afford to lose.
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