Here we are going to look at some currency trading basics in relation to points to consider before you start trading. They cover basic errors which most traders make so to avoid being in the 95% of losers check them out.
1. Are You Putting Your Faith in a Forex Robot?
Most novice traders I speak to put their faith in a forex robot they have bought. The track records look great but check the small print there all "simulated in hindsight" that means knowing the closing prices and on paper only - not real money so they don't indicate profits as anyone can make profits knowing the future!
If you think this is way to make money its time for re think.
2. Are You Going To Day Trade?
Very popular again but day trading and scalping is sure fire way to wipe yourself out. I know there are lots of track records for day trading systems - but like the robots comment above, there all "simulated in hindsight".
All volatility within a day is random so you can't win.
3. Have you made money in a demo account?
If you have don't assume you will make money in real time - why?
Because there is no pressure and without pressure, it's not real experience.
Trading with money online, involves pressure and lots of it.
4. Do You Intend Trading News Events?
If you do think twice - I saw a whole course devoted to non farm payroll and how to trade the number and that's madness. News is discounted instantly and you have no way of knowing which way prices are going to go - it depends on sentiment and that can't be judged on single event.
Never trade individual news events or the news stories, sure the stories are convincing - but that's all they are stories.
5. Are you going to Base your strategy on prediction?
Lots of traders love this idea predicting in advance with science. They follow such "legends" as Fibonacci, Gann and Elliot who use scientific formulas and of course their not scientific - if they were they would work all the time and they don't.
Markets don't move to science. Leave these to the far out crowd and trade on the realty of price change. Try and predict and your predictions will be as accurate as your horoscope.
6. What's Your Edge?
These are the reasons why you are going to win when 95% of traders lose.
It doesn't matter what it is but you must have confidence in it and know why he sets you apart. Don't know what it is?
Then you don't have one and its back to your forex education until you do.
I have been teaching trading for 25 years and its surprising how many people give you a blank look when you ask them what their edge is. It really is vital to know and if you don't your in the 95% of losers.
The reason most traders lose is through believing myths or wanting easy money and you need to avoid this.
Trading is an odds game and if you can get a method to trade the odds you can win. There is no other business where you can make so much money in terms of effort you put in and sometimes it can even be life changing - but you need to get an edge so, learn and get one and you will be well rewarded.
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