Become skillful forex trader isn't easy, but there is no need to blow things out of proportions. Trading might be difficult in the beginning, but all new things are complicated at first. It gets better with time and whoever tells you otherwise simply didn't take time to learn the basics.
What needs to be done to make Forex trading less confusing?
1. Increase Self-Confidence
The first thing that every novice trader fears is the lack of knowledge. Most of the energy goes to finding "shortcuts" and "tricks", which do not exist. Instead of looking for easy way out, start learning the basics of trading right from the start.
Another thing that will increase the beginner's self-confidence is the fact that losing trades are absolutely normal. In fact, during the sequence of daily trades, there MUST be losing trades here and there, otherwise you probably not trading forex market! Because of volatility and price action, there is no way every trade is a winning trade. So take it easy when you lose here and there. After all, it's all about the big picture at the end of the week/month. Losing trades are just accompanying the success.
2. Review and Stick to The Plan
Sticking to the plan doesn't mean to stop analyzing and enhancing your trading system. What needs to be stopped is jumping from one system to another. Switching from one indicator to another will not magically turn you into a better trader. In fact, it is not about indicators, but rather about your understanding of the market and your experience with the developed system.
3. Overanalyzing is Paralyzing!
If you use all available indicators, read news from at least 10 sites and cannot make a clear decision, you are suffering from overanalyzing.
You don't need to use all the resources you can find. Pilling up all there is to "read the market" will only confuse you more. Don't make it harder than it is. Couple of indicators and two news sites is enough to make correct moves in forex market. Charts are great, but too much visualization will make you blind!
4. Fear of Loss
Take loss under consideration and include it in your trading plan. It will happen as a normal course in trading. So instead of panic attack, you need to have clear stop loss strategy and a good money management.
Take losses as an intensive course in forex. Just like for any good course, you have to pay for it right?! So there you have it, a fantastic example of how not to trade which you can analyze and understand. Yes, it costs money, but it is much more productive than any trading courses and ebooks out there.
5. Keep Imagination at Bay
Don't try to find something that isn't there. Currency pairs only have one trend. The rest is noise which should be avoided. If you want to understand the trend, look at weekly chart you will have an idea what is happening in the market. Leave the hourly charts for day traders.
6. Using a Demo Account
A forex trading demo account is a trading account with monopoly money in it that is connected to the live market. Trades can be placed in real time and represent what would be true losses and gains if the money were real.
Before you put one penny on the line with trading, you'll need some practice. A demo account will give you the ability to practice trading without the pressure.
7. Finding the Right Pairs to Trade
Although forex trading occurs 24 hours a day throughout the week, it's best to trade during peak volume hours to guarantee liquidity. Liquidity is a trader's ability to sell a position, which is much easier when the market is most active. Assuming that you work a nine-to-five job, you'll be available for trading either early or late in the day. Depending on the currency pairs you're trading, high volume may occur at either end of those timeframes to conduct trades.
8. Do Not Take it Personally
Forex trading is often regarded as one of the easiest ways to earn money, but although it is easy, it is not free of losses. The most important trait that can either make or break a forex trader is their ability to remain unaffected by the losses. Sure, losing money is awfully frustrating, but a trader’s success depends on their ability to endure that loss. By not taking it personally and remaining calm, you will spare yourself a lot of heartaches and avoid a lot of trouble. This unique ability also allows you to see with more clarity, thus avoid further losses.
9. Manage the Risks
A major part of your success depends on your ability to manage the risks, by not falling to the mistake of trading the market with aggression. Often, it is the aggression that can lead to huge losses, regardless of how good and deft you are at reading the market, devising a strategy, and making trades. At the forefront of every trade, you should make it a point to remember the 2% risk management policy. This means you should never risk any more than 2% on a single trade. As long as you remember to do that then you should be fine.
Forex trading can be simplified, if you take it seriously and do not complicate things. Learn the basics, analyze the mistakes, avoid over analyzing and follow the trend. You can be a full-time trader if you really, really want to.