Most begginers think that trading forex is easy money. Why? Because, so many FX marketing activities encourages you to trade with large leverages, promising you large returns on small amount of initial capital. When begginers see this kind of ‘marketing’ they think that Forex is easy. It’s apsolutely not and I am sure if you read this article, that most of you have expereinced that already. Here is how to aproach the market step by step and what to avoid.
Advertising and how to choose a broker
When You see Forex advertising with ecxlusive cars, yachts, fancy expensive watches, ignore it immediately! When you see advertising where the brokers encourages you with easy earning here, ignore it immediately! When you see advertising with 100% accurate forex trading automatic or robot systems, ignore it immediately! So, what advertising to accept as normal? All brokers who advertise and offer any kind of educations are acceptable. If they offer an education materials, webinars, web and blog articles with technical analysis, set up’s and much more, even better for you. But, you must choose that visely as well, because this is your first and important step. Brokers who are looking at you as a long-term client and partner are the best choice. Choose them. I start to trade forex with Admiral Markets in 2010 and all I can say is that they are a respectable partner, especially for beginners. I traded 5 years with them and due the some changes in my business, in 2015 I have signed an asset management agreement with Swissquote Bank, which is my recomendation as well. My links are not an IB. 🙂
Demo accounts, good or bad idea
All brokers have ‘Demo Accounts’ and on my oppinion, that is the best way to enter in to Forex market. But, there is a catch! Don’t trade with large amount of Demo capital. Choose the amount you would actually invested in the market. If you have amount of $2,000 in real for investing, don’t trade with $100,000 demo. Why? If you trade with a large amount of money with Demo account, you will easely lose your real capital latter. Because, with capital of $100,000 to make a $2,000 is not a problem (2%), but with capital of $2,000 to make a $2,000 is a huge job (100%) and it’s impossible mission for the begginers. My advice is, trade on demo what you have in real. Demo account is good to learn how the platform works, to check all the futures and possibilities that the trading platform offers, nothing else. Based on my experience, it’s better to trade with $500 Real account, then $100,000 Demo account! Trust me, feeling is totaly different and it can’t be compared at all. You will see when you start to LOSE Your Real Money. Your psihology react totaly different when you trade for real.
Education and what’s the most important
If you don’t have any financial background and experience, you must educate yourself. There is so many webinars on the web, use it. Free webinars are the best choice, but don’t hesitate to pay the same if a teacher is known as a good one, because he will save you big money. You must understand how and why the markets moves, why currencies are reacting on the economic news and on wich one, why currencies are reacting on the fundamental news and finaly on my oppinon the most important thing in trading, to learn technical analysis. Because, all those fundamental decision and news are moving the market and indicates in wich direction will move for a long term, but technical analysis shows how curencies pairs will get there. Finaly, that is what is all about. Where to enter short (Sell), or where to enter long (Buy). Forex market is not a casino, you must know what are you doing in all time and why. Sure, good education is just a start and it’s not a guarantee for you’re success in the market.
Leverage, your most important decision before start
I will not write about this here, because you can read my entire article about leverage, in my oppinion the most important decision before you start with trading.
Trading, you are ‘almost’ there
After you educate yourself and when you finaly get there, you are just at the beginning of the most interesting and most exciting job in the world. But the toughest as well. You are in the market with aprox $4 trillion of turnover each day. You don’t have a clue how many zero’s have that number, right!? It’s 12! Remember that you are only a ‘small retail player’ who has come to take advantage of the opportunity that the forex market gives to everyone. But, when you start to trade for real, you will see that there is nothing easy here. You’re knowledge will mean nothing now. What you need to gain in the market is experience and that will be the ‘best teacher’ to you. More you lose, more you will learn. Trust me on that. I’ve learned the most with my biggest mistakes. Psychology is something that has to be overcome in order to succeed here and there is no way to learn that in theory. You will fight with yourself for a long time, probably several years and most of you will not succeed. If you do, you will be in between the max. 10% of those who are making money here.
“There is no elevator to success, you have to take the stairs”
– Mario Urlić