So I finally started doing a post about the basics of forex trading. This post will not tackle the things like how the forex market work as you can head over to babypips.com or post in the comments section for that and we will try to answer you. We will talk about the things you need to get started trading. Things that are important to the success of your trading career and things you need to remember to not go bankrupt.
To keep on trading and learning at the same time and not blowing your account. Your first goal in trading as a newcomer in this business is to last. Not to make profit, but to last. How many months can you go on trading before you hit 0 on your fund. We can mind the profitability later, what you need first and foremost is experience.
1. You Need to Have Money / Capital / Funds / Moolah – In order to make money work for you, you need to have your workers gathered up. Money makes more money if placed in the right spot. You don’t need to have a lot of it, just enough to get you started. $100 – $1000 is probably more than enough.
2. A Trading Account (Real and Demo) – You need a trading account to start trading in forex. There are a lot of brokers around the internet and I suggest you do some research first before giving them your money. There are a lot of scams out there so be careful.
You need a demo account to practice your trading strategy. You need real account to practice your trading strategy with the components of emotions and the feeling of earning and losing money.
3. A Trading Strategy – In any business, you need a strategy and forex is the largest business in the world. Your entry and exit strategy and money management skills will play a big role in your success. Create your own trading strategy and practice it with your demo account for at least 6 months.
You can develop you own trading strategy or customize the strategy of others. You can find a lot of strategy from books and indicators. Do your research well and practice it. Just make sure you follow it when you trade, you already invested a lot of time developing it.
4. Competitiveness – Forex is the battle between the bulls and the bears. The buyers and the sellers. You will win and lose sometimes. The important thing is, do you have what it takes to get back up in case you lose? The players in the forex market are billionaires, banks, retired generals, business tycoons, politicians, managers, retired olympic athletes which are the most competitive people in the world and you’re about to take them head on. You should be well prepared of the lost and keep moving on up to the point till you become successful.
Things You MUST NOT Have
1. Emotions – Its like poker. Emotions cloud your judgement. You need to have a strategy and the discipline to follow it. Do not give in to emotion. Emotion has no place in the market.
2. Ego – You don’t need ego. Admit it when you’re wrong and cut your losses.
If you have questions or suggestions for the next forex 101 series of posts, kindly put them in the comment section below.