18 years ago, I wish I knew more about Forex trading
Have you ever wished you had a time machine so you could go back in time and prevent all the expensive Forex trading mistakes you made in the beginning? Unfortunately, there is no time machine, but all of your new Forex traders have the huge advantage of being able to learn from more experienced Forex traders. You may learn a lot from mentors like me who have been trading the Forex market for decades if you use common sense and humility.
I am not claiming that by reading this post you will be able to avoid losing trades in Forex, but I do claim that you will be able to avoid making the majority of stupid mistakes that Forex traders make when they start or when they are ignorant. You can save a lot of money, time and emotional pain by avoiding such mistakes in Forex.
Here are some of the most important things I wish I had known about Forex trading when I started:
Pick one Forex trading strategy, master it, and stick with it
Many novice Forex traders enter the market and start Forex trading directly without knowing the entry and exit criteria of their Forex trades; They are basically pressing buttons and hoping for the best, just like in the Forex market.
The first step in Forex trading is to make sure that the trader has a working Forex trading strategy and is familiar with it. Master it, not just learn it. He must master and stick to one trading method, otherwise he will not be able to compete in the Forex market.
Early in Forex trading, save your capital
Forex traders tend to blow up their risk capital quickly in the early stages of their trading career, not even considering the importance of capital preservation. The irony is that they will learn many lessons in their early Forex trading days, but if they spend all their money, they will have little or no capital left by the time they truly understand what they are doing in the Forex market.
You have to persevere long enough to get to a place where you can thrive in Forex. You don’t want to become such a stressful trader that you give up before you reach the rank of expert Forex trader. Many people think that Forex trading is only for the super-intelligent or super-funded.
However, you have to endure and overcome obstacles in the Forex market, especially at the beginning. You must learn how to manage your capital and risk in order to ensure that you continue to trade Forex. If you go all in” and feel happy, you will soon join the ranks of the loser traders. You don’t want to be a bankrupt professional Forex trader.
In Forex trading, don’t put all your eggs in one basket
Don’t just trade Forex, stocks or commodities; Diversify your portfolio. Take a look at the major markets across several asset classes where you can make the most money overall. I study major Forex pairs, major indices, and important commodities, as well as potentially profitable company investments. When it comes to the types of markets I trade or the investments I make, I keep my options open and don’t limit myself.
This does not mean looking at every market in the world. We don’t actually look at most markets; Instead, I have a few favorites in each Forex asset class that we stick to most often.
Focus on your Forex trading results instead of private funding
The majority of Forex traders are obsessed with their trading account balance. So much so that they only expect it to rise, and if it falls, they panic. Excessive preoccupation with money in your Forex account rather than your account performance is probably the root cause of most Forex trading failures. Yes, they are two distinct entities.
The deal curve in your Forex trading account, which most Forex trading platforms will give you via a report, reflects the performance of your trading account. It is natural that you will start trading in Forex better if you start to focus more on the regularly rising equity curve than the dollar amount in your account.
This equity curve is a representation not only of your Forex trading account, but also of you, your skills and your flaws. Show me a constantly bullish stock curve even if there are some dips between highs and you’ll show me a properly organized and focused person, not just an ordinary Forex trader.
Forex trading account performance
It is not the financial value of your trading account, but the performance of your trading account that you must be responsible for. Consider the arrow curve an extension of the self. If you start dropping and start throwing away all your winnings, then there is something wrong with your trading mindset, and you should fix it as soon as possible.
If going up, keep the normal increment of the equity curve the same, rising gently over time. This does not mean that there will be no losses between wins, but the uptrend should be more or less steady, with higher highs and lower lows.
Realizing that you won’t be making a lot of money soon in the Forex market is one of the keys to shifting your focus from the dollar value of the account to the equity curve.
There is no way to make a lot of money quickly in the Forex market unless you start with a large account, which most of you do not. Simply get that idea out of your mind ASAP, and you’ll be way ahead of the majority. If you are not looking to make quick profits, your Forex trading curve is likely to slowly but gradually increase over time, which is exactly what you want.