The speculative nature of forex market provides unprecedented potential of earning money, but the uncertainties involved in forex trading also create the risk of quickly losing your capital. Therefore, it becomes extremely important to understand and learn the intricacies of forex market before starting forex trading. Unfortunately, many forex enthusiasts hurriedly jump into the arena of currency trading without going through the proper forex course or training and suffer from despair and frustration on quickly losing their money. In this forex guide, we will discuss some of these issues to improve your understanding about the forex trading so that you can realize the true potential of your career as a forex trader.
Many people venture into currency trading because they see the potential of earning easy money. You have to understand that it’s not that much easy to earn money through forex trading. Just like any other profession, you have to go through the proper forex courses or forex training to impart the right knowledge and skills before you can expect a rewarding career in forex trading. Your education and hard work will determine your success in forex business. It takes lots of patience, commitment and discipline approach to master the intricacies of Forex market.
Rather than feeling discouraged by my advice, you should gear up with strong determination to learn currency trading. Once you are determined to earn money through forex trading, many advertisements will keep you motivated by featuring that you can easily and quickly earn money through forex trading. Obviously, the chance to your financial freedom might fill you with a full gush of adrenaline as you think why waste your time when you can earn money right away. Everybody who aspires to make a fortune in forex trading thinks that way, and many suffer by taking imprudent leap right away. However, you have a chance to succeed. When I was ready, nobody was there to guide me, but I am going to share the basic facets of forex trading.
To begin with, let me explain the Trading System. All experienced Forex traders use a set of rules for conducting their transactions. These set of rules are known as the Trading System. These rules basically define the exact time when traders wish to enter or leave the market in order to make a profit (opening the position when prices are low and closing when the prices are high).
A Trading System is the first basic prerequisite for your successful career in forex trading. If you don’t define and streamline these set of rules as per your personality and preferences, you won’t be able to follow it and thus, earn a reasonable profit from your currency trading. The forex traders use technical indicators as well as their intuition to create their Trading System. The systems based on technical indicators are also known as the mechanical systems, while intuition based systems are indicated as the discretionary systems. It can be very dangerous to use a discretionary system during the early stages of your career in forex trading. You should initially focus on a mechanical system to learn the required skills and discipline in currency training. Gradually, your experience will empower you with better decisions in forex trading.
Before you jump into forex trading with real money, you should always try your skills using a demo account. Almost every forex broker provides demo accounts where you can test your Trading System using virtual money. Demo accounts may not be very useful in case of discretionary systems, as you know that you are not going to lose anything, but they serve as a very effective tool to test your mechanical systems and ability to apprehend the technical indicators. Demo account will help you in streamlining your Trading system so that you become comfortable in making strategies that provide profitable returns in your currency trading. It may take some time depending on your skills and understandings, but you should never jump ahead to start actual trading unless your Trading System doesn’t deliver consistent profits over sufficiently long periods of time. Even if it takes several months, learn the skills with patience and determination.
You should understand that you are going to gain nothing by being dishonest to yourself. You have to consider every signal generated by your system regardless of your feelings about the profitability of a particular signal. If you introduce your discretionary judgments at this stage, you will face difficulties in the next two steps that I am going to explain in this forex guide.
Ok, suppose you start getting consistent profits from your positions in the demo account. You might be getting very excited to start a full swing on your real account. This is another very tempting excitement you have to control. Real forex trading accounts are totally different with demo accounts with lots of emotional charges like greed, fear, anger, etc. That creates psychological barriers in your decision-making process. Whether you are trading in bonds, stocks, futures, grains or currencies in the forex market, these emotional charges, I think, create the difference between a successful trader and totally frustrated ones with huge losses.
Now we have reached the stage in this Forex course where I am going to explain how you can deal with these emotional charges to make a consistent profit out of your actual forex trading like you did with your demo account. You should use a real but limited funds account to see how you perform in real-life scenarios. There are many brokers that allow fractional lot trading. It means you can trade with any amount you are comfortable with (even cents). You can only learn to handle your emotional charges and realize their implications by operating real account. When you are comfortable with your Trading System while effectively dealing with your emotions and repeat the success story of your demo account, you become ready to our next step in this forex training. You should understand that different systems will create entirely different emotions, and this is the reason why you should devote sufficient time with your limited account to gain experience and skills in currency trading. In case you failed to achieve the results as obtained on your demo account, you will have to streamline your Trading System. Most likely, your Trading System doesn’t match with your personality and preferences. Your success at this stage is very crucial for your success in the next stage with a full-fledged forex trading account. If you are unable to achieve consistence results with your limited account, it means you are not ready for the next stage. You have to be honest and do the right things before you can move forward.
Operating a full-fledged real account is the final stage of your forex course. If you have performed well during the earlier stages, you should have gained sufficient experience and skills to repeat your success story during this stage as well. You should have confidence in your strategy as you have already proven yourself with consistent profits while operating demo and limited accounts. You will definitely succeed as only a few reckless traders fail during this stage (if they honestly follow the stages described in this forex guide and perform well).
You can gain your financial freedom through Forex trading, but it requires patience, discipline and forex education and training. However, when you honestly follow the steps in this forex course, you will have a better chance of making a fortune through currency trading.