Tips to Get You Ready to Trade Forex

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Tips to Get You Ready to Trade

If you’re anything like me before you jump into something new you’ll first do your research. Whether it’s taking up a new hobby, or buying a smartphone. Deciding to take up trading is no different. If you’re thinking about getting into trading you’ve probably already done a bit of research and looked around the internet and you’ve probably come across a bewildering number of systems, methods, courses and brokers to choose from. Sometimes all these choices can leave you confused and unable to decide which is the correct way to go – after all, this is the money you’re putting on the line.

I’ve been trading the markets for many years but I still remember the heady excitement but also confusion and disappointments of those first days. In this article, I’m going to give you four tips to help you wade through all that information so you can make a confident start to your trading. Hopefully, these tips will help you reduce financial loss (even before you start trading!), minimize your stress levels and get you up and trading sooner.

If they try to sell you an automated system or robot, run in the other direction

If trading was as easy as setting up an automated system and walking away then everyone would be rich. But we all know that it’s a zero-sum game – for every winner, there is a loser. So logically, automated systems can’t be all they are cracked up to be.

Sorry, but like everything else, trading needs some work on your part. There are some great indicators that will take the leg-work out of a lot of technical analysis and help you spot trends and entry and exit points, but you still need to develop your trading plan. Robots may work for a while if the markets are strongly moving in one clear direction but won’t be flexible or intuitive enough to cope with unexpected fundamental events.

There is no greater gift you can give yourself than to gain the knowledge and experience that comes from trading for yourself. Develop an effective method that is flexible, suited to your mentality and time availability and gives you hands-on trading. Over time you’ll begin to gain a greater understanding and intuition of the markets and price action. There is no replacement for this.

Don’t overtrade

Day trading or scalping is for losers. Here’s why. You end up spending too much time glued to your PC, watching the tiny fractional pip movements of prices and missing out on the big picture. You open and close many positions with short timeframes throughout the day with very low return. After a while, you begin to resemble an addict or gambler.

A better approach is to spend your time doing a solid analysis of the markets and aiming for higher potential returns. Well-placed deals have a defined method with entry and exit points as well as good risk management in place with stop loss and take profit orders. Longer timeframes tend to cut out the ‘noise’ often seen in shorter ones – you are looking at more significant events or market cues to price direction rather than being diverted by small moves.

 

Over-trading can also be hazardous to your trading psychology. It increases your stress levels and makes you more prone to mistakes and irrational or impulsive judgement calls.

 

Less technology, more simplicity

While it may look cool, setting up multiple trading screens is unnecessary and can lead to an over-saturation of confusing data. You really only need one screen on a platform that allows you to trade from the charts.

Did you know there is a science behind pinball machines that you find in arcades? They are perfectly wired to give you just the right amount of stimulation with lights, sounds and moving objects to keep you playing longer than you intended to. Setting up your trading station with multiple screens and data feeds not only increases your stress levels but can also lead to an overload of information that makes you doubt your well-thought-out trading plan and even lead to more trading than you at first planned. And let’s not discount the stress placed on your trading as you try to pay off all that expensive equipment and feeds.

Trader training

A serious trader will look for a top-notch training course and a mentor that they can click with. There are many self-learning tools from online videos, books and webinars. Do take advantage of these but keep in mind there is no replacement for physical learning like in a classroom situation. When looking for a mentor, look at their credentials – how long have they been involved in the markets themselves, are they still trading and what method do they teach? Will they continue to support you even after the course is over and provide market updates or reports? And finally, what structure does the course take? A workshop environment is much more conducive to learning than a ‘talking head’ giving you theory. This you can get from a book.

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