Three sure fire steps in understanding Forex Trade

Great you are about to get involved in the wonderful world of Forex trading. And I want to believe you are already aware of the high risk involved in investing. You have investment capital to risk and are not going to be using your monthly food budget to trade. Adequate time to follow the market daily has been set aside.

Am sure you now have the basics of what every currency trader needs to get started. But have you prepared yourself by covering the three most important things to do before you risk any money?

Educate yourself first! This is perhaps the biggest mistake beginning forex traders make. These traders make up the vast majority of the 95% of all traders who fail. Before you even risk one cent or even open an account with a forex broker take the time to read a few books or enroll in an online course about currency trading. You need not learn all the intrinsic details of every trading strategy. I am talking about the fundamentals. Basic aspects of the market, how the charts work and what the symbols mean. The common terminology and slang used among traders. Long vs short, pips, spread, margin etc. By knowing all these basics you will be ready when you start to trade. You need to be confident in your knowledge if you want to make good decisions. There is no “pause for added research” button in live forex trading.

Understand and cultivate a “wining trader” mindset. Forex trading can be extremely taxing on the emotions leading to poor decisions and losing trades. It is important to be prepared for these emotions and have techniques available before hand to keep them in check. The elite currency traders are the ones who have the ability to operate in the market arena detached from powerful emotions. There are all sorts of resources available to help you understand this aspect. Many techniques used by martial artists, elite soldiers and law enforcement officers can be adapted for this purpose. Learn about it, prepare and practice your personal mindset techniques before you trade with a live account.

Practice, practice, practice! This is listed third for a reason. Unprepared would be forex traders who start out immediately dabbling with a practice account can become overwhelmed and discouraged quickly. Trying to figure it out on the fly is difficult or nearly impossible. The practice account is where you apply the fundamentals of what you have learned in the first two steps. Jumping in unprepared is like joining a boxing school and starting out sparing with a champion on your first day. You should look at this practice as a mental version of military or self defense training. You hone the skill set until it becomes automatic when it is really needed. If you have prepared yourself you will learn quickly how the market works. You will then be better able to process the lessons learned from practice and adjust your strategies accordingly with little second guessing. Many successful traders will tell you that they practiced for months before they ever put one dime in the market. This is a winning approach!

By following the steps I have outlined you will become a much better trader. The prior education gives you knowledge. The mental preparation gives you confidence to apply that knowledge. The practice gives you the ability to react to sudden changes and act in the proper way on reflex without hesitation. These three things are by no means all you need but they are the core foundations for getting off on the right foot in currency trading.

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