The opinion about how easy it is to learn forex trading seems to have two sides - while some resources claims that 90% of traders don't make it, others provide arguments regarding the possibility of mastering forex and earn the living. Which source should you trust? Is it so black and white? Or it is rather gray? Do you have a chance to become a professional trader?
In general, learning the basics of forex trading shouldn't be a problem. You don't need to have a phd in economics in order to figure out the essence of currencies. The vital parts that every beginner needs to know by hard are:
1. Technical and fundamental Analysis (yes, both of them, since in order to see the whole picture, you need to use both analysis).
2. Charts and time frames
3. Candlestick
4. The double P (pivot points)!
5. Fibonacci
6. Support and Resistance
7. Price movements
8. Money and risk management
9. Position sizing
10. Trading plan, discipline and daily trading journal
Once the basics are covered every trader realizes that there is more to trading then just the theory, because even if you know it all by heart, you are still most likely to lose money.
So what is the solution? Is there a magic trading strategy that assures success? Can you follow what other successful trader does?
The problem is much deeper than you might think - trading is all about emotions and here is where most traders fail. While your trading decisions are majorly influenced by your feelings and emotions, you are most likely to stay on a loser's bench.
There is no one universal solution to forex, since it is dynamic, flexible and rather complex. In order to become profitable, it is necessary not only to be top-notch analyzer, but also be ready for radical changes and fast logical decision making.
What can possibly go wrong, even if you know it all?! Hesitation, fear, greed and envious frustration are well known pullbacks in trading. Every time a trader is attacked by these poisonous and destructive feelings, most likely the poor decision will be made and, not only will the possibility pass by, but there is a big chance of significant money loss.
So how to stay focused and not join the 90% of proclaimed loser traders? The trick is not to turn yourself into greedy, money-hunting Uncle Scrooge, constantly dreaming about the "deserved" itsy-bitsy slice of the several-billion-a-day-forex pie. Focusing on money is bound to affect the decisions and the quality of your trading.
Instead, your ultimate goal is to brush away the thoughts of soon-to-be-obtained millions in your bank account and year-long holidays in Bahamas, and to concentrate on becoming rather mechanical in your trading, analyzing and profit calculating.
The most difficult part of it all is to chance your perception about profit-loss. It is in human nature to feel guilty, ashamed and hopeless when we find ourselves in the loss situation. The trick is to turn the loss situation into a lesson, write it down in your trading journal and try not to make the same mistake again. With one lesson learned, you are one step closer to unlock the profitable trader in you.
Another worthy tip - keep it simple! Do not use all the indicators possible and do not overanalyze. By thinking too much you block yourself from focusing in order to make decisions!
Lastly, stay away from overtrading. Fear it as you fear the tsunami, the apocalypses, the global earthquakes, demons, cockroaches, graveyards - whatever makes you squeal! I personally have a huge poster right above my computer saying " Don't Overtrade Today, Stupid!" and it honestly helps!
In case you cannot define overtrading, here are some examples:
· Putting on trades outside your rules / trading plan.
· Putting on more trades than you can effectively manage.
· Scalping in and out of the market when holding a trade would have produced better profit.
· Feeling the need to get the lost money back RIGHT NOW!
· Searching frantically for possible trades without any reason for it.
To summarize, yes forex is difficult but with the right set of mind you can earn the living with it. Becoming in a way robotic and much less emotional will tremendously help you not to freak out and cry over the spilled milk, but rather move on to the next challenge. And no, the challenge is not about getting those lost money back. NO! The challenge is to follow the plan, start over the next day and find the best opportunities.
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