Trading forex seems like a very complex activity but actually there are a set of defined procedures and rules that if followed will make the job a lot simpler. To learn forex you need to take into account the following:
? Consistency
Which ever way you decide to trade forex, whatever systems you use, plans, tools and techniques, consistency in your approach is critical. If you keep changing the goal posts then you have nothing to measure yourself again. Trading forex can be quite boring at times. You can be sitting in front of a computer for hours and hours before you can make a trade. Whatever you do, do it consistently!
? Measurement
In order to understand if you are trading profitably or not, you must measure what you are doing. Every time you make a trade you should record every element of it. For example you should include the time/date, the forex pair you are trading, whether your buying or selling, the lot size, stop loss, profit target and the reason why you took the trade and what the result was. Only by recording this information can you understand what is happening and what you need to do to improve your results.
? Risk Management
The most important factor in any kind of trading is to protect what you already have. It's harder to win back money that you might have lost than to make new money. For example if you lose 50% of your trading pot you would need to double it (increase by 100%) just to get back to the original amount. That is why it is so important to manage your risk. You should not risk any more than 2% of your pot for any one trade. If you follow this rule then you would have to lose over 40 consecutive trades before your trading pot would be wiped. You cannot learn forex successfully unless you follow a risk management plan.
? Trading Plan
As mentioned above, consistency is crucial for trading successfully. To be consistent you must have a plan, and the plan defines when you enter a trade, when you exit it, how much money you risk for each trade. Once you have tested and refined it then you can execute it consistently.
? Psychology
Another very important factor in trading is your psychology. How do you react when things are going well and when things are going bad? What will be your trading style? What time frames will you work with? Are you trading part-time or full-time? What is your financial situation? All of these questions and others need to be answered.
? Persistence
Trading forex is challenging but can also be very rewarding. However persistence is a fundamental part of your success in trading. You are not going to be a millionaire overnight with trading; it takes time, patience and persistence. You develop a system, test it, measure the results, fine tune it, test it, measure and hopefully improve. Once you get it right it will provide you with a wonderful income for life. Don't give up!
To learn forex and trade successfully requires that you consider all of the factors mentioned above. There is no short cut in making money, but there is a huge opportunity to make a massive income if you follow the rules. If you would like to know more than please click on the link below for a free introductory guide.
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