Back in 2015 i got to know about the forex market and began trading, i remember Demo trading(Practice trading) for about 3 months at the time. My mentor and coach at that time advised me to.
Being in the university at this point of my life, I was getting tired of being broke and having to rely on my low paying job, friends and family to sort out my bills, and i wanted to at least have some extra income to be able to solve other basic life problems and necessities. I heard and watched videos on YouTube about trading and traders making money pretty much out of thin air by just speculating on the market, This got me really excited.
But after a few weeks of Demo trading and having a few successful trades, I thought I had the forex market all figured out and I was about to become a multi-millionaire, I was overwhelmed at that time with lots of conflicting information online on forex strategies, techniques, indicators to use and so on, My trading chart was a mess on it's own and stressful to look at.
To cut the story short, Fast forward to about 2 years later, I had blown out over 7 accounts, and lost thousands of dollars and this was money I couldn't' afford to lose, This got me depressed and revengeful, I did not review my mistakes or work on my trading psychology, i sidelined my mentor since I thought I had the market figured out, I went at it alone.
The objective of this article is to shorten your learning curve and point you in the right direction with the right knowledge and information you need to become consistently profitable first and in the long run successful in the forex market. There are lots of things I wished I did differently back when I just started, You don't have to start with having bad experiences, Learn from peoples mistakes and ignorance before you begin trading and investing in Forex.
Let's get into the top 5 things i wish I learned before i started trading.
1. RANDOMALY CHOOSING A FOREX BROKER.
Forex brokers or brokerages serve as middlemen between you and the market, In other words, A broker is a financial company that will provide you with the access and platform to trade foreign currencies.
It's very vital that you do your research or ask for help from a professional before choosing to commit your money to any broker, there are lots of brokers online and they all offer different services and requirements, lots of scam brokers as well.
About 77% of traders most especially new traders will lose their money according to forex illustrated, SO beware and understand what your broker is offering you before you go live trading(Trading with real money)
2. NOT UNDERSTANDING RISK MANAGEMENT.
Risk management is one of the most important factors to pay attention to in the financial market, Trading psychology follows. Risk Management is ignored a lot by beginners and intermediate traders because of the perception that the more you risk in the market the more money you will make. Thinking this way can give you some wins in the short term, But long-term, you will end up blowing out your trading account to zero, starting afresh or worst case giving up entirely and calling forex trading a scam. But the reality is , If you do not manage your risk, on any/every trade, you will end up overtrading, and since you cannot control the market, At some point you will experience huge losses.
The smart way is to treat every trade like you may be wrong, but always doing your in-depth analysis and preparation.
Here are some tips on R.M
- Do not enter big trades/big lot sizes on a small account
- Develop your chart reading and analysis skills
- Have a risk management plan and be consistent with it
- Not more than 3 trades a day is enough as a beginner
-Diversify your trading portfolio, For example, if you sell EUR/USD and then buy USDJPY you have bought the "USD" twice and this will leave you exposed if the USD takes a plunge.
- Always Use a Stop loss: There are several techniques on how to do this, we will talk about stop losses another time.
3. TRADING THE NEWS(DAY TRADING)
Day trading the FX market as a beginner will not help you or set you on the path to becoming successful in the market. Day trading is mostly done by professional traders and comes from years of experience and having a deep understanding of the market and it's dynamic nature.
But if you decide to trade the news or you think being fundamental in your analysis approach to the market is the best route for you, Then be prepared to be bombarded with lots of information and opinions from several sources, This can often lead to over-analysis and you may end up making a bad judgment(s) in the market or worst-case, make emotional/sentiment based trading.
4. TRYING TO PREDICT THE MARKET.
In the early days of my learning about the market, i found myself trying to predict market direction of the pairs I was trading and I encountered lots of losing trades doing this till the lesson was learned. Trying to predict the market is like imposing your belief on the market about what you want the market to do or the direction you want it to go that will be in your best interest, But this is not possible, Because you cannot control the market, You can only control yourself and the decisions you make regards your trading, and react to whatever the market presents to you.
You should rather focus on building strategies, perfecting techniques and managing your trades and risk every time and ensure your losses are little when you are on the wrong side of the market. Learning and fixing this mistake completely transformed me into a better trader, Too bad some people never learn from their mistakes.
5. QUITTING YOUR JOB TO TRADE FOREX FULL-TIME.
As a beginner, Probably after getting some success/profits from the market, Quitting your job should not be a decision you rush into. "A good trader/Investor should not Put all of his Eggs in one Basket".
Becoming a full time trader comes with lots of stress and can mess with your emotions. And it's a lot of responsibility too. I found out full-time trading can be boring, lonely and you will find yourself resisting the urge to do something when the market is slow or doing nothing. Your patience will be tested as a full time trader.
You don't have to quit your job to achieve success in the market, You should keep your job and plan your trading around your job instead. Balance it out and succeed at both. Thank us later for this Advice.
Trading the market is a skill and learning any skill takes some time to master, Forex trading is a marathon a continuous learning curve, There is always a challenge and something to improve on, The market will punish you with losses if you ever get complacent, Impatient, Greedy or Overconfident.
You must learn to also be confident in your trading abilities, Keep learning from professional traders, books, Trading conferences, Online courses etcetera, Then, form your own valid opinions and strategies from what you learn.
These are some of the 5 things i wish i knew before i started in the forex market. They could save you some time and money if you apply them.
For more information about Forex Trading, Tips and Techniques to navigate the market successfully, You can send us a message here at SAMPEDIA, We will be glad to guide you.