In this Q&A episode, I discuss the 5 things I believe all traders must know before starting to trade Forex. Those 5 keys to trading are summarized below.
The advice shared in my Facebook Live Q&As are based on my own experience and the interviews I had with multiple successful traders on the Desire To Trade Podcast.
5 Things You Must Know Before Starting To Trade Forex
I wanted to share those 5 things you must know as they are often overlooked. Looking back at my trading, those are things that would have helped me without a doubt.
#1: Track Every Single Trade
If you do not track, you have no way to go back and find ways to trade better. That is the reason why I recommend you start tracking every single one of your trade from now on (no matter what). If you take bad trades, track them. If you take trades that do not respect your plan, track them. And obviously, do not stop to track when things are going well.
And obviously, do not stop to track when things are going well. Keep it going!
#2: Trading Is A Game Of Probability
It's not because you read about a strategy and implement it flawlessly that you will see success. It is well-known by most experienced traders that any trading strategy goes through a period of consecutive losses. At that point, you need to remind yourself that trading is a game of probability.
That being said, you can have a general idea of the win rate your strategy is expected to have, but you can never know how many losses you'll have to go through before you reach the win rate you expected from the start.
#3: Trading Comes Down To 3 Simple Types Of Trades
No need to complicate trading. Most often, when traders feel overwhelmed, it is due to the fact that they try trading everything at the wrong time. By focusing on understanding the types of trades, and then selecting one you'll learn to trade, you will be able to bring back a great chunk of the simplicity that surrounds Forex trading.
Successful currency trading, after all, is about focusing on certain types of trades, and placing the odds in your favor (see #2).
#4: Testing Builds Confidence
The only way to build confidence as a trader is to see results. Those results can either come from a live trading account or from testing. The ladder is much less stressful, so I recommend you focus on testing before you ever put real money in a trading account.
The more you look at charts containing examples of your trading setup, the more familiar you get with your setup. You no longer worry about whether your trading strategy works or not because you've seen more than enough trade examples. Testing definitely builds confidence. If you do not feel confident about your trading strategy, you haven't done enough testing.
#5: The More You Automate, The Easier It Gets
You do not need to create an algorithmic trading system that will replace you, but you absolutely need to understand the importance of creating successful trading habits. Those are things you do every time without thinking because you have created a routine.
Good examples of automation could be:
- Placing a stop loss when you enter a trade
- Review your trades every Sunday
- Look at the news prior to entering a trade
- And much more…
The way you want to go about creating habits is to do the action several times until you no longer have to think. You might want to start by placing a reminder on your screen until you no longer need the reminder. That has been a wonderful trick for me!
What is one thing you are going to implement after listening to this podcast? Leave a comment below, or join me in the Facebook group!
DesireToTRADE’s Top Resources
- DesireToTRADE Forex Trader Community (free group!)
- Complete Price Action Strategy Checklist
- One-Page Trading Plan (free template)
- DesireToTRADE Academy (lifetime membership promo until Dec. 18th 2016!)
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