The question of whether it is possible to make money trading forex is one which many new traders will find themselves asking, often after several losing trades. Many traders who have gained experience within the forex markets will answer that is possible, although it requires a large degree of dedication and an even greater level of discipline. For those wanting to learn how to trade to be profitable, and eventually make a living from trading forex, have the benefit of a lot of available information in order to make their learning curve as steep and rapid as possible.
Filtering the available information and help
The internet has revolutionised all forms of forex trading and has brought trading platforms in to peoples homes. Over the past twenty years, the developments in trading technology has increased immeasurably alongside developments in the way in which home-based traders can access information about trading. Forums, information websites and educational courses have also grown allowing new traders to access information which was once only available to professional traders. Unfortunately, this has developed alongside a large amount of mis-information and get-rich-quick trading schemes and systems which has created a complete industry of its own.
Filtering the available information means that, however tempting, traders should seek to avoid purchasing systems before developing a solid understanding of how the forex markets operate. The type of information worth disregarding in the first instance are 99% of automated trading robots, trading systems purporting to earn you a living and also signals services. Remove these three things from a trading education and new traders will protect themselves from losing a lot of money without even knowing how or why it was lost. If a trading system or method sounds too good it probably is. If anyone was going to sell a profitable system at an affordable price it is almost certainly not going to be profitable in the long-term.
Learn the basics without making things complicated
Learning the basics may sound, well, fairly basic although it is surprising how many new traders, myself included, tried to skip a few months of school to get to the fun lessons. The temptation for all forex traders is to set up a chart, apply some magic indicators and press buy when the light turns green. Unfortunately, if it was this easy the forex market would not exist and we would have all retired yesterday.
Getting a good understanding on the basics of the forex markets means applying some time to understanding how they function and what moves supply and demand of currency around the world. Taking a book on the basic principles of both fundamental and technical trading will open a new traders eyes to the charts and allow the development of personal trading ideas and strategies. Regardless of whether fundamental or technical trading is a particular style of trading you want to explore, it provides a great insight, and often a profitable perspective, on where the market is going to go next.
Price action trading and reading charts
Thousands of intermediate traders will admit that they have been through the mad stages of trying every strategy going and applied every indicators possible only to strip down their charts and go back to ‘naked’ trading. This is not quite as exciting as it sounds, but traders get a great deal of satisfaction in being able to predict price movements without relying on any indicator or third-party information. This is the beginnings of becoming a completely autonomous trader and making decisions based on things which have occurred thousands of times on forex charts. Although this takes a while to achieve and lots of hours studying forex markets and price charts, it really can be considered a breakthrough moment for all successful traders. Whether they stick to ‘naked’ trading or apply a favoured indicator to enhance the signals at the moment does not really matter, what counts is the ability to predict market moves.
Get a strategy you like and stick to the rules
Jumping from strategy to strategy is common for every single new forex trader. The fact is that no strategy works all the time and the only ones which do are because whoever trades it sticks rigidly to its rules. Following the rules sounds easy, but in theory but is the number one way failure of all traders. Without following the rules the strategy is not being employed and forex traders will never know if it was actually any good. Sticking to the rules of a forex strategy shows discipline but also determination and will help develop analytical skills in to why a trade was profitable or not.