If you want to succeed as a Forex price action trader, there are certain things that you HAVE to do. This brief Forex trading lesson contains a checklist of things that you need to do or know before you can start trading profitably. Refer back to this article as often as you need to make sure you are doing what it takes to succeed long-term in the markets.
- Master price action trading strategies.
The first thing that you will need to do if you want become a successful Forex price action trader, is master price action trading strategies. This might seem pretty obvious to you, but I am always somewhat surprised at how many of my students simply fail to truly MASTER the price action strategies that I teach.
If you don’t 100% understand your trading edge, and how to trade it, you cannot become the trader you want to be. So, do not skip out on putting in the necessary time and energy to completely master price action. Perhaps the best way to go about doing this is to master one Forex trading strategy at a time.
- Obtain a thorough understanding and practical “working” knowledge of risk reward, position sizing, and money management.
The next thing you’ll need to be on top of is Forex money management. The best trading strategy in the world will be totally useless and will actually probably cause you to lose money if you do not practice proper money management every time you trade.
You will need to be sure to develop not only your understanding of things like risk reward and position sizing, but you must also develop the habit of implementing them correctly on every single trade you take.
- Be sure you have mastered daily chart trading first.
I get a lot of emails from students and potential students asking me about trading the lower time frame charts. It’s almost as if most traders don’t even consider that the higher time frames might be a better time frame for them to learn on than the fast-moving and whip-saw heavy lower time frames. I literally cringe when I read emails from traders asking me about trading 15 minute or 5 minute charts…or God forbid…1 minute charts.
If you haven’t discovered the value in higher time frames yet, I strongly suggest that you read this article: Trading Higher Time Frames Drastically Increases Trading Success. I will say that I personally mainly trade off the daily charts, occasionally I look at the 4hr or 1hr, but it’s rare and I NEVER go below the 1hr chart. The material in my forex trading course reflects my philosophy on trading higher time frames. Mastering the daily charts first will make your path to consistently profitable trading much smoother and far less stressful. Most traders never go back to the noise-filled lower time frames once they discover the effectiveness and simplicity of higher time frame trading.
- Be sure you have mastered trend-trading first.
The trend is indeed your friend. I am always a little bit amazed at how many beginning traders choose to ignore trend trading and instead try to pick tops and bottoms all the time. Trying to constantly trade counter-trend is a fool’s game; counter-trend trading should not even be attempted until you have totally mastered trading with the trend on the daily chart. Trading with the trend is the highest-probability way you can trade; this is because there are both fundamental and technical reasons why the market is trending. You don’t really need to know what the Forex fundamentals are, but you can rest assured that when a market is clearly trending in one direction, there are solid reasons for this, and the easiest way to make money as a trader is to watch for these trends and enter them on obvious price action setups.
- Develop a routine – Forex trading plan and Forex trading journal.
Another thing you need to make sure you do before you start trading with real money, is develop a Forex trading plan based on the price action strategies you’ve mastered, and keep track of everything in a Forex trading journal. In the Forex trading journal link above, you will find a link to a good Forex trading journal that you can begin using immediately. So, there really are no excuses. I will not go into the details of why you need a trading plan and a trading journal, as you can read the articles I linked you to above for more on that. But, I will say that this is not something you should take lightly, and THIS is how you forge discipline and the proper trading mindset. If you don’t take trading seriously and treat it as a business, you will not succeed.
- Know which currency pairs to focus on and what the best trading times are.
Many beginning traders end up trying to analyze and trade 25 different markets, this is clearly not efficient or conducive to developing proper trading habits. You need to focus on the majors, and you can even micro-focus on a few of the majors if you like. Pick several markets and really apply everything you’ve learned to them, learn how they move and their nuances…master them. You will be far better off developing yourself into a “specialist” on one or two markets than you will be trying to trade everything under the sun. For more on the best currency pairs to trade and forex trading times, follow the links to left.
- Never stop learning – join my trading community for on-going education and interaction with other price action traders.
Forex trading is something that you must continually “train” for by making sure you don’t become rusty. You need to keep your trading skills sharp, even after you fully master price action trading. The best way to do this is to join an interactive trading community of like-minded Forex price action traders that are discussing the same strategies. My trading community provides this platform; in addition you get on-going content updates from me, members’ email support, members’ daily commentary, and of course my comprehensive yet concise price action Forex trading course. Education is the key to all success in life.