If you want to learn Forex trading, and join the elite 5% of traders who make money, then you need to consider the following 4 key points. If you ignore these 4 key points, then you’ll lose money – and never achieve currency trading success.
Anyone can learn Forex trading – but most traders simply get the wrong Forex education and then lose their money.
Here are the 4 key points:
1. You’re On Your Own
There are many e-books and currency trading systems sold online, each of which promise you success – in return for spending a few hundred dollars. However, these books and systems wont help you win in Forex trading.
If you think about it, if these vendors were so good at currency trading, they wouldn’t need your money – they’d be too busy making money trading. They wouldn’t have the time, or inclination to sell you their winning strategies!
If you want to learn Forex trading, you’re on your own – and you need to devise your own Forex trading strategy, in order to achieve success. This is a lot easier than many traders think and is covered in part 2 of this article series.
There’s another advantage to building your own Forex trading strategy – which is:
You’ll understand the strategy, and it will suit your trading personality. This will lead to confidence in your method – which is essential, if you are to follow it through the inevitable losing periods.
It’s a fact that if you don’t understand and have confidence in your system, then you won’t have the discipline to follow it. Without the discipline to follow a trading system, then you don’t have a system in the first place.
2. Use Technical Analysis
When you start to learn Forex trading you need a methodology – and the best place to start is with Forex charts – and a system based on technical analysis.
Technical analysis works because human nature is constant – and chart patterns repeat themselves. This means we can trade the patterns for profit.
Many traders like to trade using news – but this is a critical error! Why? Quite simply, news is stories – and you can’t trade news for profit. The stories are interesting and convincing – and in most cases dead wrong.
The main thing to remember is that the Forex markets are a discounting mechanism – and news is instantly discounted in the price. This means that you are trading “old information”. The market moves on future perception – not what has just happened!
By simply looking at your Forex charts, and following price, you see the reality of prices now, and act on them – that’s what makes technical analysis so powerful.
3. Keep it Simple
Any currency trading system based on technical analysis should be kept simple. Simple systems work much better than complicated methods. Why? Because they’re more robust – they have fewer elements to break, in the brutal world of trading.
You should use trend lines, and just a few confirming indicators, to give you an indication of price momentum – and that’s it.
In currency trading, you get your reward for being right, and the success of your trading signals – not the effort you put in.
4. Patience and Discipline
You’ve probably heard that discipline is a key factor in successful currency trading – and it is, but don’t forget that you also need patience. You need patience to wait for the right opportunities to present themselves. You also need patience to trade through the losing periods. Finally, you need patience to make the huge gains.
Many Forex traders lack patience and discipline, and trade too often. They can’t follow a big trend – they get excited when they make a decent profit. In their excitement, they can’t resist taking their profit too soon – or move their stop to quickly. This leads to marginal profits – when they could have made a much bigger profit.
If you want to make money in Forex trading, then you need patience and discipline. Without patience and discipline, you’re certain to lose your money.
The 4 points above are critical to your currency trading success – especially when you’re starting to learn Forex trading.
So far, you’ve learned that you need to devise your own system – to gain confidence and discipline. Then, by basing your system on simple technical analysis, you have the basis of your Forex trading strategy.
Part 2 of this article continues your Forex education with the need for money management, the best trading methods, and how to trade the odds in order to achieve success in Forex trading.