Let Us Help You Learn Forex Trading
Trading forex is like any other work: you must learn the basics and practice before engaging in real time. Additionally, forex is a market with both universal implications (insiders profit at the expense of outsiders, the jargon of professionals, and more.) and specifics (national banking holidays, sticky price points, statistical relationships, and more). Unfortunately, a few hours of simulated trading on your computer and attention to a few self-help Youtube videos will not secure a steady income. The path to learn forex trading is no less arduous than any other professional endeavor.
Fortunately, there are many technical analysis tools that can help you analyze trends, an understandable example of price movement from which small traders can profit. You can avail yourself of advanced tools from a number of brokers and trading platforms while learning with simulated portfolios. As noted, this process and period cannot be rushed or skipped. The dynamics of the forex market requires knowledge and skill. Without a determination to learn, and the ability to withstand some blows and face some challenges, you will not be able to make a living trading forex. Beginners can and should start practicing with free demo accounts. In this manner you gain experience about both the market and yourself, required understandings to become successful. Read through the rest of this post if you want to learn online trading.
Prerequisites to Becoming a Pro
Before you begin trading, you need to clarify for yourself what are your operating assumptions, such as how much money you can afford to lose and what are your return expectations. Only after this are you truly able to start to learn forex trading.
This market has a changing cast of many thousands of active participants. As the outcome is largely zero-sum, some half of all trades are not winners. Thus, while a winning transaction is the counter-trade to a losing one, ensuring that you are on the correct side of this pair requires discipline, learning and continued attentiveness.
How to Learn Forex Trading
While the forex market is largely efficient, in that prices reflect all available information at any moment in time, in many cases you need to be only slightly faster or smarter than the average market participant to initiate a winning trade position. But behind that position initiation is a set of assumptions and a disciplined coherent understanding earned by studying the market and practicing trade execution. No less important is understanding how to profitably use the platform offered by your forex broker.
Use the available free simulated environments to practice both basic and advanced strategies and methods to learn forex trading. While these demo accounts do not accurately reflect the vagaries introduced by order execution, they do represent the best available means to test your strategy and execution. No other easily available mechanism can duplicate the simulated real time experience. This step and stage is an absolute must for anyone who wants to learn forex trading.
Learn the Trading Jargon and Important Determinants
Before you can use a demo account and all the market analysis tools properly, you need to learn the trading jargon and market idiosyncrasies. This endeavor will take you some time and effort to learn, but like the rest of your education, the more skills and knowledge you bring to the trading "desk", the better your expected and actual results. Your education should be thorough and may take you to distant and obscure corners of the market but by staying focused on what matters: interest rates, central bank policies, government fiscal policy, macroeconomic factors, and technical indicators you can begin to decipher what causes prices to move.
Learn Forex Trading By Mastering the Common Indicators and Technical Analysis Tools
- Bollinger Bands are a volatility indicator most commonly defined as a rdange of two standard deviations above and below a simple moving average of price, popularized by trader John Bollinger
- Moving Average Convergence / Divergence is a trend-following momentum indicator developed by Gerald Appel in the late 1970s that displays the relationship between two moving averages of prices. The MACD is typically determined by subtracting the 26-day (longer) exponential moving average (EMA) from the 12-day (shorter) EMA.
- Fibonacci Retracement is a technical trading approach wherein the Fibonacci sequence, which includes 38.2% and 61.8% of price provide potential reversal (support and resistance) levels
The Role of Self-Discipline in Learning Forex Trading
The role of self-discipline when you learn online forex trading is critical throughout the process.
- Keep a journal of everything involved. It will force you to articulate and record all your actions (and inaction) with the benefit of hindsight. Reflection helps you more clearly see patterns in your behavior, both helpful and those you should consciously alter.
- Achieving excellence at anything requires upwards of 10,000 repetitions and the more minutely and granularly you parse the associated tasks, the more insight you will have into those tasks most requiring your attention and practice.
- Scheduled periodic reviews ensure an additional critical perspective when you learn forex trading. In addition to the natural post-mortem when a trade results in exceptional results (good or bad), imposing a regular chronologic perspective helps you understand both your own repetitive tendencies and that of the exogenous market. Cyclical elements are a tangible part of market behavior.
- Eliminate extraneous activity. Success requires focus and execution. Critical here is outsourcing mental (and physical) effort. Trading is a draining activity and every iota of strength spent elsewhere is that much less to apply to the professional task at hand.
- Think creatively. While not seemingly an example of disciplined behavior, the essential human ability to synthesize disparate and seemingly contradictory information through a process of reflection is ever more important. In our age of big data, ever-more sophisticated trading algorithms, and artificial intelligence, the individual trader cannot hope to "outthink" the computing power available to large organizations with whever forex calculator and forex charts at his disposal. Where opportunity exists, however, is to creatively input the human element in the processing of available information and to formulate from this understanding a trading position
- Seek out new sources of information and modes of thought. Force yourself to seek out and differently process market-related data.
- Follow the herd - at a remove. There is safety in numbers. Trend following can be an effective strategy for trading forex. But...only the paranoid survive. In forex trading, it is better to be late to a party than early. And do not overstay your welcome. Continually monitor your stop orders to ensure that profits gained are not lost and losses are not compounded.
- Embrace cognitive dissonance to learn forex trading. Markets personify the simultaneous existence of dichotomous beliefs. Freely-arrived-at auction prices by definition entail two parties settling their difference in expectations by taking opposing sides on asset prices. So understand that as convinced or ambivalent as you are in your positions, the mirrored opposite is held by someone else (or his algorithm). While crippling uncertainty and equivocation results in paralysis and cessation of activity, truly understanding opposing viewpoints will make you a more nimble and humble forex trader.
- Do your homework. Practice, prepare, and plan for all eventualities. Even with outsourcing and systematizing of your activities, putting all of the pieces together always involves reviewing and engaging in efforts beyond (and beneath) what you expected.
But finally, when you learn forex trading, the hopeful sense of accomplishment and financial reward are earned for a job well done.