In certain aspects Forex has been around us, since there was
no electricity in caves. Long ago people always traded currency they
had: whether it was food, animals or some shiny minerals. With the
creation of modern money (coins and then paper) different nations traded
one currency for another. In modern times currencies are widely traded
by the world's major financial organizations. The birth of a retail
market in mid 1970s allowed non-commercial players to trade Forex.
However, the most crucial change to the industry came in 1996 when Forex
trading was put online.
Nowadays, the Forex child grew up and became the real giant. Over
$4.5 trillion is traded daily in the Forex market where almost
$1 trillion belong to the activity of such traders like me and you.
These numbers strengthen Forex reputation and tell us about the broad
opportunities for making profit with it. However, where the benefits,
there come the dangers. Not every Forex-teaching company tells you about
them — these guys need you to be thoughtlessly attracted to trading.
In this article, I want to give you the basics — five steps to put
your thinking along the way of desirable profits in this biggest market
space in the world.
1. The Hype Makes It Wipe
One trade makes me a millionaire. Hail Mr. Soros! This is what
brokers want you to think when you are about to start with Forex. Relax
and refer such words to what they call "True lies." Not a Schwarzenegger
movie, but a twisted reality. You can strike rich in Forex — it's
"true." However, "lie" is that it comes an easy way. If you don't
be disciplined, prepared and patient, your winning chances are close
to lottery. Approach market responsibly with a balanced frame, set your
goals and stick to them. Like in fishing, success comes to those who
wait and then strike.
2. Don't Stay Hungry
I basically don't mean that you have to trade Forex after having
a nice breakfast. No. Before putting any cent into this venture, think
if you are ready to lose it. Don't leave your family without any food
or clothes after betting all on "black" and losing with "zero." Trade
a capital that you can afford to lose without affecting your common life
strongly. As a trader, I have to admit — more than 80% of new traders
lead to losses. So think twice. If you are ready to say "good bye"
to your investments and still carry on, you have a chance get into those
20%.
3. Read, Listen, and Learn
Like you wouldn't borrow your hard-earned to some guy Phillip you had
met only once. You would not jump into such a risky and volatile market
like Forex without knowing "who," "what" and "why." Your complete
research on the subject should include all the market aspects: how
it has developed, where it is going, etc. Study the FX history more
carefully than I put in first paragraph. Then you could speak to other
traders and hear what they say (e.g. go to forums) about the worthy
trading practices, best FX tools and services, the surest tips
on predicting the market movements, etc. Also learn to read charts,
understand and distinguish the Forex news, and (most important) learn
your strengths and weaknesses to work on them henceforth.
4. Use Many Baskets for Your Eggs
The way to success in Forex (if I may call it like this) is thorny
so treat your capital with care. Do not put all of your hopes on one
trade — use the certain percentage of your equity. Although these
numbers are up for debate, but take a loss into account, try to predict
where your account will be after you lose a trade. My receipt here: use
Stop Losses and Take Profits, trade smaller trades, "kill" your
greediness, and DON'T even think to overcompensate for losses. Loss
means loss. Extending your Stop Losses in hope the market will reverse
itself is worthless. Usually, it does not do that. Your "best friend",
a trend, could become your worst enemy. I would also recommend you
to trade several currencies to branch out the risks in terms of trades
and currencies.
5. Don't Let It Go to Your Head
It's like a deep-town rock band, nominated for a musical award: they
haven't finally won but already turned into mannered and arrogant
creatures. As for traders, there is no good for them to get too excited
and anxious with trades. Any given second they can reverse. If you let
your Forex successes go to your head, it will change your trading
philosophy so you might take risks where you never did.
Be consistent and get it one by one. Like deserts are thankful for
the rain, be grateful for what you win. And carry on with the current
scheme if you are profiting. Stick to your plan and be deaf to your
hunch calling to move Take Profit or extend Stop Loss.
As an "after word" I would like to say that Forex market is immensely
huge. You can profit quickly and get large returns. However, if you are
betting on "black" because it's your favorite color, you can win
in casino, but with Forex in the end. Address it like a business (with
same responsibility) and it will get back to you with the benefits.
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