Forex Guide for Traders
by Raul Lopez of StraightForex.com
In this Forex course we will review some steps you need
to take care before you venture into your trading journey.
Most traders venture into the Forex market with little or
no experience in the Forex market. This results in painful
experiences like loosing most of the risk capital, frustration
because it seemed so easy to make money, etc.
The first thing you need to realize is that it is not easy
to make money. As every other endeavor in life, where important
rewards are to come after mastering it, you need to work
hard. You need to get very well educated and experienced
before having the possibility to receive important rewards
on it. The key on mastering the Forex market relies on commitment,
patience and discipline.
Ok, you have decided you are going to trade the Forex market,
you have seen several advertisings featuring how easy is
to make money in the Forex market. You might think this
is your opportunity to reach your financial freedom, right
away, time is money, why waiting any longer if you have
the opportunity to make money now. I know, I've been there,
but you have a chance now, I didn't, no body told me what
I am going to tell you.
We, Forex traders, make transactions based on a set of
rules. These sets of rules are what we call a Trading System.
Our systems tell us the exact time where we need to get
in the market and out the market in order to make a profit
(i.e. buy low sell high.)
Creating a system is the first big step you need to take
care first. Why is this so important? Because you need to
build a system that suits your personality, otherwise you
are going to find hard to follow it, thus hard to profit
from. A system can be based on technical indicators or what
we called a mechanical system or based on experience and
intuition or what we call discretionary systems. It is highly
recommended to use and try first a mechanical system, because
discretionary systems are dangerous during the early stages
of a Forex trader (can lead to indiscipline.) With experience,
on later stages, you will find out which signals work better
and which ones to avoid.
The next step in this Forex course is to try your system
on a demo account. Most Forex brokers offer a demo account,
an account with virtual money. This is an excellent choice
to test your trading system as there is no money at risk.
In this step you will figure out if the strategy works for
you. If you feel comfortable trading it, then it is most
likely to produce good results. How much time should you
stay in this step? It varies, but you shouldn't go one step
further until your system gets consistent profitable results
over a period of time. It can take many months, but remember,
you need to be patient.
You must be honest to yourself; you need to take every
single signal generated by your system, not only the signals
you thought were going to work, otherwise, you are going
to have problems in the next two steps.
Ok, by know you had consistent profitable results on your
demo account. You might think its time to go full. Nope,
nope, nope. There is a big difference between trading a
demo and a real account. The most important difference lies
on emotions (fear, greed, anger, etc.) These are psychological
barriers that affect every single decision made by traders
regardless of what he/she is trading (stocks, bonds, Forex,
futures, grains, etc.) These emotional factors, in my opinion,
are the most determinant factor that separates profitable
traders from the others.
The next step in this Forex course is specially designed
to deal with emotions and to confirm the results obtained
in the prior step (consistent results in a demo account.)
At this step you need to trade in a real account with limited
funds. Some brokers offer fractional lot trading. Meaning
you are able to trade any desired amount (even cents.) The
important thing here is that these emotions we've been talking
about are present only when there is real money at risk.
At this stage, you are going to see if you are really comfortable
trading your system and if you are able to trade with such
system, remember different systems produce different emotions.
If you are able to produce similar results than those obtained
in a demo account, then ready for the next step. If you
didn't, then you might need to create another system, there
is chance your system never fit you. If you created consistent
profitable results on this stage, you have a chance to produce
similar results in the next one, on the other hand, if you
didn't produce good results in this stage, you will not
be able to make on the next stage. Remember, you need to
do things right, and be honest to yourself.
The last stage is trading in a real account with sufficient
funds. If you are at this stage, and have passed successfully
every prior stage, then you have a chance to make it, go
ahead and try it, you need to be confident in yourself and
in your system, your strategy have already produced consistent
profitable results, there are reasons to believe you are
going to make it. Very few traders fail at this stage (if
passed successfully prior stages.)
Trading successfully is no easy task, it requires a lot
of work, patience, discipline, and education. By completing
the steps outlined in this Forex course, you have a chance
to produce profitable results. And again, you need to be
honest to yourself about the results obtained in every stage.
Written by Raul Lopez, instructor for StraightForex.com,
which offers a Complete Forex trading program including:
ONE-on-ONE coaching, a live conference room, and an online
forex course and guide for traders.