Step 1: Getting started in Forex TradingYou aren’t going to be the wolf of any street overnight. Making money through Forex trading requires time, patience and a little bit of luck. The true winners are the ones who know their limitations, make calculated choices, are in control of their emotions and prepared to ultimately play the long game.
Section 1 – Before you even go near a computer…
Before you even go near a computer and log onto a Forex website find the best mirror in your home and stand in front of it. Ask yourself the following questions:
What do you want to achieve from Forex trading?
So you have decided that you would like to have a go at Forex trading, because you want to earn more money than you currently are doing. That is fine, but do you want financial independence from trading or just some extra money to supplement your income to buy a more expensive car or take the family on a better holiday this year? What constitutes financial success or failure? Is it a safe, steady profit of £2000 over the course of six months, or to become a millionaire as soon as possible? What kind of trader are you going to be and how are you going to go about it?
How much time can you devote to trading?Forex trading requires a lot of time and patience dedicated to it every week. To be a successful trader you need to be able to acquire knowledge of the markets, the currencies you are dealing in and to keep abreast of current affairs which may affect their prices. An unforeseen event in one country may send its currency plummeting. Do you have enough time to react accordingly? Speaking of time it is important to make clear and realistic goals of how much money you want to make over a certain time frame.
What are your financial limitations?
How much money can you afford to risk on what can be the flip of a coin (quite literally). How much money could you stand to lose in one day before having awkward conversations with the missus or your bank manager? If you made a substantial amount of money in a short space of time would you put it away for a rainy day or gamble it on another fluctuation in the market?
How would you control your emotions if you were to succeed or fail?
If you made money very quickly would you be able to control your excitement and let it rule your actions? Alternatively would you be prone to panic, fear and depression in the event of severe financial losses? Enhanced emotions will only cloud your judgement of the deep analysis and decision-making process involved in successful trading.