Alongside Googling “how to make money online”, entering a search query asking “how to become a successful Forex trader” is going to yield almost as many misguided and sensationalist recommendations.
Unfortunately, these simple questions do not have simple answers.
There is a lot of misinformation about becoming a successful Forex trader on the internet. The cause of the overwhelming misinformation is because the online trading industry is one of the best paying industries for affiliate marketing.
The side effect of this phenomenon is that many people are drawn to the Forex industry, not for trading; they join to take part in lucrative affiliate marketing programs.
Many Forex affiliate marketers are very often not experienced in the financial services industry and are not regulated or governed by any competent authority. All they care about is one thing; selling Forex products and services to anyone, regardless of suitability.
Unfortunately, these Forex affiliate marketers are responsible for a great deal of misinformation about how to become a successful Forex trader. The cloud of misinformation generally leads to a single falsehood; it’s easy to be a successful Forex trader, and anyone can do it, even beginners.
The very first distortion to crush is presuming that Forex trading is easy; this statement couldn’t be further from the truth. Now that we’ve clarified that, let’s explore a few points to get on the right path towards successful Forex trading.
Understand the Role Psychology Plays
Forex trading is distinctly not gambling; it’s not about chance or luck.
Forex trading is all about understanding how the market behaves, interpreting different events, understanding how other participants think and making decisions based on knowledge, information and experience.
It takes a lot of work to become successful at trading Forex.
Besides being book smart, you need to be aware of the psychological factors that are threatening your success. You need to deal with your own greed, fear, overconfidence and doubts.
That means knowing when to quit, accept that losses are inevitable and not closing trades too early because you’d rather profit a little than lose a lot.
The one thing that Forex has in common with gambling or betting is how you psychologically process trading decisions. Thankfully, you’re not the first person to ever want to trade Forex successfully and therefore you can take advantage of listening to the mistakes that other traders have made and attempt not to repeat them.
Here is an excellent list of mistakes of a novice trader and tips on how to avoid them.
Don’t Overlook Education
You’ve probably heard that Bill Gates reads over fifty books a year and that Warren Buffet reads 500-pages a day.
There are many reports from successful traders who recount their complicated journeys. For example, here is a list of 9 things I wish I knew before I started trading forex.
One thing that any profitable Forex trader will tell you is that education is the cornerstone of any path to success as a trader.
Have a Clear Trading Plan
Everyone needs a plan, and your trading strategy is essentially your blueprint.
Without having a clear trading plan, there is no way to evaluate what you are doing right and wrong.
There is a lot to consider in your trading plan. For example, what currency pairs are you going to trade; what is going to be your risk to reward ratio; how big should your orders be.
You even need to consider the best day to trade Forex and what time of the day you want to concentrate your trading hours.
Whatever the market throws at you, no matter how unlikely, you need to have a plan for it.
Trial and Error
Even though you can read endless blog posts and forum threads in a bid to avoid making any mistake, you’re still going to make some.
You need to embrace the fact that every mistake you make is an opportunity to learn.
Besides having a clear trading plan, you need to keep a detailed journal to document every decision you made and scrutinize them at a later date.
Many traders use the weekend to review their trading history to try and understand what went wrong and hopefully stop repeating it and pinpoint what went right and strive to replicate it.
Find the Right Tools for the Job
Before you can start placing trades (hopefully after extensive practice on a demo account), you need to choose a trading platform.
Don’t expect to be using the Bloomberg Terminal like you see Bobby Axelrod trade with on the TV show Billions. A subscription for that platform costs around $5,000 per month.
There are many online trading platforms available. Some platforms require traders to buy a license or pay a monthly subscription to use the software.
The good thing is that many Forex brokers offer trading platforms like MetaTrader 4 and cTrader for free. It would be quite complicated to use any other platform with most brokers.
Before you download anything, try searching for the best Forex trading platform for beginners.
Once you’ve chosen the platform you want to begin trading with, consider what else you can use to enhance your decision-making capabilities.
Many traders use various Forex indicators to generate trade signals, confirm ideas, identify trends and display market sentiment.
Can Anyone be Successful at Trading Forex
There is no denying that trading Forex is a gateway to making money online and you don’t need to be in Canary Wharf or Wall Street to trade Forex like the banks.
Consider that in recent months, many people have migrated from crowded office spaces to working from home.
Did it make anyone’s job easier?
Working from home just makes it easier to get to work. Simply because a job can be done from the comfort of your own house doesn’t mean it will be easy.
So long as you don’t play along with the illusion that trading Forex is easy and you apply the right amount of effort and discipline, then you can most certainly become a successful Forex trader in the markets.