If you’ve read a few articles about Forex trading, you probably came upon an article or two listing all its advantages over other types of “DIY investments.” We won’t rehash them all here, but suffice it to say that if you want to go into Forex, there’s no time like the present. There’s really no good reason to wait if you have the spare cash and you’re really interested.
However, you will have to accept that there will be some waiting time involved between when you go into Forex trading and cashing in your profits. So don’t book that world cruise just yet.
Here are some stages in Forex trading, where you will have to exercise a great deal of patience:
So you’ve been reading a lot of Forex guides and books, right? In all probability, you probably need to read a lot more. In some ways Forex can be highly technical, and you have to understand what you are reading. This is SOP that you can’t ignore. You have to read until you understand completely. When you can write your own articles about the topic, only then should you feel confident enough to risk your own real money on Forex trading.
In your readings, your first concern will be finding the right trading strategy that conforms to your own preferences. Some people agree with the basic tenets of fundamental analysis, and this means that they study how economic stats and news affect how currencies fluctuate in value. Others specialize in technical analyses, which often focus on the movement of the prices. They study bars, graphs, and charts in order anticipate how the currency will move next.
You will want to focus on certain currency pairs which best fit your chosen trading methodology. You will have to learn about when you should enter into a trade, and when you should get out. Then you’ll need to pick the right Forex broker, so that you can put what you’ve read into practice.
Using the Demo
When choosing a Forex broker, you have to make sure that they offer a demo account. That’s because you also need to wait until you’ve developed enough experience before you use real money to trade. A demo account gives you a realistic look at what will happen when you execute your trades. You will know how much you will profit or lose, while you don’t risk your money at all. It’s all practice, but to make it work you have to treat it like the real thing.
The demo account lets you tweak your trading strategy so that you have plans for whatever contingencies that regularly happen in Forex trading. You can then formulate your own guidelines on what you will need to do for specific situations.
It is during this stage that you should have a concrete business plan written down. Your plan will describe your overall objectives and activities, while you also develop certain plans for various trades. You can consider doing Forex for real when you have at least 3 to 6 straight months of consistent profits you can live with.
Wait For Your Entry and Exit Point
Okay, so now you’re in it for real. If you are like most new traders, sometimes your emotions will get the best of you and your plans all come to nothing. So now you will have to develop the fortitude and discipline to wait.
Your plan normally will have an entry point all laid out. You have to wait until the conditions (such as the right price) materialize before you pull the trigger and enter a trade. You can’t panic and jump the gun.
It’s basically the same principle once you are in the trade. Sometimes you’re showing a profit, but it has not yet reached the profit-taking level you previously indicated. You mustn’t let your desire overwhelm your plan that you worked on before.
Sometimes the currency level may go down but it hasn’t yet reached your stop loss. you may be tempted to get our right away to really limit your loss, but that only means you did not trust your analysis at all. Your plans are actually worthless, because you don’t follow them.
Wait Before You Quit
If you’re new, then you may only have a string of losses at first to show for your efforts. This is normal, and that’s why realistic expectations must be part of your plan. Give it more time and wait, because the more experience you get, the better you become at trading.Related posts:How to Keep Your Cool in Forex Trading The Top 3 Reasons Why New Forex Traders Lose Money Factors to Consider When Choosing a Forex Broker The Top Challenges Forex Traders Must Face