Forex trading is not a computer game, it is not simple and it is definitely not 100% get-rich-quick scheme. Before your clench to yet another mouthwatering promise of unlimited profits and absolutely no loss, go over our list of things you should know.
1. Fully Examine And Review Your Forex Broker
First of all, it is always a good idea to know everything about your forex broker. Regulated Forex Brokers are generally more trusted. Read everything written in tiny letters (especially go over terms and conditions). Find out where the broker is located and make couple of phone calls – see if they actually answer! Customer support can be at times even more important than any trading features available!
2. There is No Holy Grail
There is no million dollars within couple of weeks, no super automated software that will do all the trading for you while you shop for another hammer H3, no magic indicator to lead you to the right answer every time you trade, no money without hard work, planning and learning! Sorry to disappoint, but there is no Holy Grail. Stay away from fraud statements such as:
· “Guaranteed 100% profits, no losses with Automated Trading!”
· “Make your fist million within a month forex trading.”
· “Make $5000 every week!”
· “Don’t have time to learn how to trade? Try this software!”
· “Never lose again in forex”
3. Forex Training and Courses.
Like any profession, forex trading requires hard work and lots of study. If you don’t have enough time understanding the basics – it is a great idea o get a mentor or enroll in the trading courses. There is scam even in that, so do your research before you invest the money in any class.
4. Reviewing your Trading Plan is a Must
You have to work out the details of your trading plan. Don’t be surprised if your trading plan will grow along with time. The more experience you get, the more detailed your plan becomes. Here are some of the things you have to consider:
· Entry Price
· Target Price
· Plan B – how to get out of a bad trade
· Maximum amount you can lose
· Time Frames
· Size of the Position
· Self-penalty for not following the plan!
· Trading style
· Factors that support a decision of entering a trade
Trading plan should be written down and updated weekly. It is always a work in progress – your plan will be influenced not only by your experience, but also by seasons, market conditions, economic news etc., each of which requires different strategy.
5. Keep a Journal
Nothing can be as helpful as your own trading journal. You should write down your daily experience, compare it to the trading plan, and examine the emotional factors. Whether it was a good or a bad trade, every aspect around the decision and the trade itself should be closely analyzed.
Before jumping into a trade, make sure you know why you have decided to make a trade in the first place, what kind of profits do you expect from this particular trade and what are the maximum possible losses resulting from this decision. Can you handle it? Are you influenced by emotions from the previous trade (revenge, anger, greed)?
If you aren’t clear about something – don’t trade. Expect the unexpected and, as the professional traders say, keep in mind that “No trade is better than a bad trade”.
7. Learn to Loose.
Loosing is part of the game. Learn to accept it with grace, even if we are talking thousands of dollars. Count your profits in the long run and not on the daily basis. Today may be a loser day, a week after you might not only win your losses back, but makes a distinct profit. Your profits are relative to time.
It is important to admit your mistakes. The best exercise is to say it out loud to your spouse or another fellow trader (of course, taking under account that those people do support your current profession).
Don’t fight it – this only leads to even more unnecessary losses. No, there will be no sudden opportunity to get the money back. And no, you shouldn’t sit in front of your computer now searching for profitable movements. Accept the losses and take time out. Close your computer, take a shower, go out to meet friends. Tomorrow is another day.