How to Trade Forex
So you have decided you want to learn more about the forex market and possibly even start trading some of your own money in it. Well, the first step towards learning how to trade forex is to understand that you should only trade real money that you can afford to lose and that you seriously and honestly do not mind losing. If you genuinely accept that you could lose all the money you start with than you will be starting from a more level-headed and clear thinking state of mind which will keep your expectations in check. After all, if you are aware that you could lose all the money in your trading account, why would you not work to effectively limit your risk on each trade? Learning how to trade forex is a process that takes time, energy, and dedication on your part, and if that weren’t enough you also need a healthy dose of discipline if you want to stick around to become consistently profitable.
Most people approach forex trading from the complete wrong perspective and with the complete wrong set of expectations. That is to say that most people get into forex trading because they believe they will make a lot of money really quickly and relatively easily. This is in fact the same belief structure that causes most people to lose all their money in the markets. When learning how to trade forex it is imperative that you view trading as an alternate way to invest in your money, rather than a get rich quick trading system. Forex trading can be a very powerful way to consistently beat the returns you would otherwise make by blindly investing in stocks or in following advice from brokers. However, this can only happen if you learn how to trade forex with a proven trading method that is effective in varying market conditions and by effectively managing your risk on each trade.
As far as trading method goes, the big factor in determining your potential success or failure in the forex market relies on your ability to effectively understand and utilize the method you choose to trade with. If you are trying to learn some 200 page indicator based trading system or if you think you are going to get rich by using some hot new expert advisor program that you heard about in the forums, you are sadly mistaken. These methods are only going to confuse you and pull you away from the real truth and meat of the market, which is price action. To consistently profit in the forex market you first need to learn how to trade forex with a simple price movement analysis based method.
Your learning curve will be greatly shortened if you accept that simple trading methods like price action analysis are the best way to learn how to trade the forex market. You will likely encounter a variety of different trading methods and systems when first starting out on your trading journey, just keep in mind that if it sounds too good to be true it probably is. Many people selling forex trading robots and indicator based systems will purposely back-test their system over an ideal time period in the market that makes their system look insanely profitable. Keep in mind that this type of back-testing can be done to make any system look profitable and is essentially nothing more than a huge marketing ploy. Stick with price action analysis methods when learning how to trade forex and you will at least know that you are basing your trading decisions on relevant and logical information.