The thing with Forex trading is that it is marketed by most Forex brokers as "Get Rich Quick." So, if you're hooked to trade for that reason, you already started on the wrong foot.
When I started trading Forex, it's easy for me to say, "I could be different from the average people, I don't need to research, I already have a background in trading! Let's get it on!"
And the rest is history - the account was busted lol.
Solution: Educate yourself first and find a reputable forex broker.
When we say educate, it not just about learning the basics, it should be complete. First, you need to know your trading personality. Do you enjoy short term trading? Do you like position trading? Or do you like investing?
You see, even if you copy a "profitable trading strategy" but it does not suit your personality, chances are it won't be effective because it's simply not your interest. Although you might say, "I don't mind using any kind of strategy as long as it's working and making me money."
That is a very logical point. However, drawdowns or corrections (a decline from a historical peak in trading) are bound to happen. Every trader will undergo a drawdown from time to time. George Soros has his drawdowns, Paul Tudor Jones has his drawdowns, Warren Buffet experiences drawdowns, and even EA Robots has its drawdowns as well.
Now, if you're copying a "profitable strategy" and it goes through its drawdown cycle, your doubts will arise. Then, logic will come - "maybe the strategy is not profitable anymore." Sooner or later, as you see your profits get wiped out or even occur high losses in your capital, you will decide that enough is enough. I'm out.
Gary Vaynerchuk (American-Belarusian entrepreneur) once said, "To me, you have to love your game even if it does not go your way."
In Forex trading, understanding your inner self is your "first assignment." knowing your risk tolerance, knowing your trading style, how much are you willing to lose, how much time are you dedicated to trading, and learning are just some of the few important aspects when starting.
Here in LollipopMoney, we have a profitable Forex Mutal Fund (click here to see our trading history at ZuluTrade), but even if you try to invest with our mutual fund, it could not be profitable to you if it's not your investment style, specifically if it does not fit your risk appetite and time frame.
Think Long Term and Set a Reasonable Target Returns
What is long term to you anyway? 3 months? 1 Year? 5 Years?
The sooner that you accept that Forex trading is not a get rich quick scheme, the faster your progress will be. The thing with most beginners is that they want to double or even triple their account balance within a year, and some even within a few weeks. And that is the scariest strategy.
How does 15 to 20% return sounds to you annually? Not good enough? Well, the truth is if you're going to make it at least breakeven within a year as a beginner, you're already legendary.
Check the stats out there, 90 to 95% of Forex traders around the world are losing money. Therefore, the remaining 5%, you will see that they don't use more than 1:10 or 1:20 leverage, some are even 1:1.
Although some slip through the net every year by making more than 100%, it's just like playing Russian roulette - do it every year, and the odds are, it will blow your heads off the next year, or next-next year, or next next next next year. It will soon come :)
Knowing your trading style, educating your self, testing your strategy using demo accounts, keeping the risks low, and finding the "good broker" are your first assignments before becoming a Forex trader.
There are some arguments between, "is it good to start with a demo account or real account?" Keep in mind that one of your best enemies in Forex trading is your emotions. In demo accounts, there could be "no emotions" because even if you see a huge loss, it won't affect you that much mentally knowing that isn't real.
Above all, learning how to handle your emotions should be your priority along with risk/money management. I even see stories of some traders who are GOOD with demo accounts, but BAD with live or real accounts. Why? It's because they trade without emotions using the demo account.
One of my best suggestions is to use a cent account. It is kind of in-between the real and demo, you will get the best of both worlds.
What are your trading strategy right now? Share it with me in the comment section below!