The Beginner Forex Trader Game Plan
1. You need time, money and dedication.
You should go into this with the realization that you may not be profitable straight away and that it might take you years of hard work and a lot of money invested in the learning process before you see any profit – can you live with that?
Remember this is a world where you can make money knowing absolutely nothing and a world where you can still lose money, even if you think you know everything.
2. You need some kind of motivation to get you through the times when you think trading might not be for you and you want to give up.
We’ve all got our reasons as to why we want to do this – You might want to work from home so you can spend more time with your family. You might want to make a bit of extra money. You might want a mansion with nakie ladies serving you margaritas. You might have this weird need to want to be the best, or you might just genuinely love to trade.
Whatever your motivation is, you need to remember it and let it be the thing that pulls you through those rough moments – because there’s going to be plenty of them.
3. You will need to build up your basics.
If you don’t have a proper understanding of margin/leverage, don’t understand the value of lots/contracts and don’t know what a stop is – then don’t even think about placing a trade.
Some good beginner books to get you started:
- Reminiscences of a Stock Operator
- All About Forex Trading
- Forex for Beginners: A Comprehensive Guide to Profiting from the Global Currency Markets
- Principles of Macroeconomics
- High Probability Trading
4. You will need a mentor and/or a support network of other traders.
Those people will be there to help you out with your ideas, listen to you complain about your stuff ups and share resources with you.
You want people that are not afraid to be honest with you and you want people that won’t reply with, ‘You are weird’ when they receive a whining/you-kinda-sound-high email that was written on no sleep at 5 AM.
5. You will obviously need a method/system.
It is up to you to build something that is going to work with your lifestyle and your personality.
Don’t just follow a bunch of people on Twitter and place a trade because 5 people said they are going long AUD. Find out how/why they came to that conclusion (might be fundamentals, trend lines, pattern formations, indicators) and then look into studying that for yourself.
6. You will need to come up with a plan to deal with those emotions and silly trading mistakes.
Having some kind of method or system that works is only just one part of it. Being able to completely execute it the way you designed it is another story.
Entry/exit hesitation, not being able to let a trade play out, doubting your method and learning to be patient are just some of the things you will have to deal with even if you have a ‘winning system’.
7. You will need to find ways to deal with frustration/stress.
There will be times when you spend a lot of time working on something that appears to be promising and in the end it turns out to be nothing. There will obviously be times when you lose money. There will be times when you miss big moves. There will also be times when you are on an amazing winning streak and you make a silly mistake that turns into a losing trade and it completely rocks your confidence.
Sometimes you won’t be able to completely shrug everything off and move on instantly, so you will need ways to deal with this frustration. Meditation, paintball, blogging, taking a nap – you just need something.