Updated: September 28, 2020
Let me take a short break from talking about the current series on portfolio management and share with you today a quick post regarding forex trading.
This article has been in my inbox for some time now and I felt the need to publish it already as I know Richard, the post’s writer, has been patient and eager to share these with you.
I’ve been trading currencies on a live account for almost six months now and all I can say is that it really takes a lot of focus and discipline to be successful.
I’ve experienced large drawdowns and losing streaks, but I’m glad that I still end up profitable, thanks to the strict risk management that I apply to my trades.
Below, Richard shares with us three practical steps on how to achieve success as a forex trader.
If you plan to trade currencies in the future, then I’m sure this would be a lot of help.
The forex market is a fascinating and hugely popular trading environment and one which has the potential to challenge even experienced investors.
That said, it is also one of the most lucrative financial markets, as traders can make margin-based investments with the capability to deliver significant returns on their initial investment.
Given the corresponding levels of volatility and liquidity present within the forex market, however, it is an entity that must be approached with caution by aspiring traders.
Those who misunderstand the nature of the market or fail to learn its fundamental principles are likely to experience failure and potentially huge financial losses in the process.
Becoming a Forex Trader: Three Key Aspects of Preparation
So with this in mind, how should an aspiring forex trader prepare for entering such a unique and challenging market? Well, there are several key things to bear in mind, each of which can provide the foundation for a long term trading strategy. Consider the following:
Learn the Fundamental Principles of the Forex Market
As strange as it may sound, it is not the complexities of trading that pose the most problems within the forex market? Instead, it is a lack of attention to detail, or more specifically an unwillingness to learn the fundamental principles of trading, that prevents traders from realizing their potential.
You must take the time to research the market thoroughly, taking into account everything from its history and evolution to the factors that distinguish it from stock and commodities based investment options.
Once you understand the nature and the daily practicalities of trading in the forex market, then you can begin plotting a route towards profitability.
Secure a Suitable and Easy to Use Trading Platform
Technology has played a pivotal role in making forex trading a more accessible practice, with the development of evolved online trading platforms particularly significant.
Essentially cloud-based or downloaded software applications, can be accessed either through a desktop PC or smartphone and equip traders with a comprehensive suite of technical indicators and analytical tools.
With most of these platforms also offering users to chance to create a customized display that relays market information in real-time and an easy to comprehend manner, they perform a critical function in helping traders to maximize their investments.
Practice and Cultivate a Practical Trading Strategy
Even when equipped with in-depth market knowledge and highly evolved technology and analytical tools, you should still tread carefully when first entering the forex market.
Through your trading platform or an associated online broker, you should be able to access a demo account that provides practical experience of developing strategy and executing transactions.
By gaining experience in a live and yet entirely risk-free market environment, you can gain a greater understanding of how to succeed while establishing suitable and risk-reducing exit strategies.
Whether you are an inexperienced trader or someone who is simply new to the forex market, these steps can provide a gentle and necessary induction. After all, the forex market remains the most volatile of its type, and as a margin-based investment method, it can incur significant losses that are far greater than you may be able to absorb.
So adopt an organized and considered approach to your preparation, and equip yourself with all the knowledge, tools, and practical experience that you need to achieve success.
Richard Benedict resides in London and trades currencies for a living.
Forex Trading is highly speculative. I will only go into Forex when I want to hedge other of my trades. This is just my personal opinion.
Dun mind me but those advise are not clear and concise. And learning about fundamentals is like watching an old man bathing slow and non reactive.
in today trading context, trade with what u see, visualize expectation if outcome is not what you expected. get out n pull the trigger and reverse trade.
Trading has to be passive and substantial. afterall facing the screen for 4hrs straight is not what I would call freedom.
Just a thought.
Dear Mr. Fitz:
Regarding Forex Trading:
– I read you mentioned “long trading” in one of your blogs about forex trading, what do you mean by that and how long actually is long trading?
– Based on the videos I watched on YouTube about forex trading, the brokers monitor the ups and downs of the pips for a particular currency pair and that is when they make a buy or sell, they set up a “stop lose and stop gain range. They trade within hours or minutes.
– My inquiry: is it possible to buy a currency and sell a day or a week later specially those currency pairs that are likely to follow a certain pattern of range (EUR/USD). I mean like passive investing only shorter time… or it is required that you trade within the day ?
– The forex brokers, do they give tips when to buy or sell, just like the SAM of stock or you decide on your own analysis ?
Regarding the Seminar of Mr. Mark So,
– You mentioned its only about knowing if forex trading is suited to the attendee, if the attendee is interested in it, do they give seminar/guide on how to use/operate the online software that they recommend or they give a trial account and its up to the user to learn for himself?
– what are the benefits of joining Forex Club Asia, is there an annual fee or its lifetime membership?
Thank you and God bless.
“Long” trading or “going long” means buying a currency pair. Meanwhile, “short” trading or “going short” means selling a currency pair. It does not refer to time, but action.
Yes, it is possible to hold a trade for several weeks, even months, but you will probably need to have a wide stop loss, which means you need to have a high account balance.
For a micro account, that’s probably at least $500 so you won’t get a margin call for such “position trades”.
No, forex brokers don’t give tips on when to buy or sell. But they provide economic news, and currency analysis. However, there are sometimes “trade idea” articles that they publish on their site, as guest posts from professional forex traders.
At the end of the Mark So’s orientation, you will be given a guide on how to open a demo account with FXCM, their forex broker partner (where I also have an account), and additional resources where you can learn forex trading.
Moreover, there will be an offer to attend a full course. This is where you will learn everything you need to learn about forex, including how to use the platform.
The enrollment fee for the full course is around P25k – it’s usually lower because he frequently offers discounts and promos, specially to those who register through me.
As for the benefits, FCA provides a venue where you can interact with other forex traders, an important part of continuous learning and keeping your motivation to trade.
You’ll also be able to “copy” Mark’s trades because he regularly posts his actual trades in the member’s area. If you don’t have time to study the market, simply copying his trade idea is not a bad strategy at all.
Moreover, as a member, you can attend all of Mark’s forex courses as many times as you want, forever. When I attended the full course, two of my “classmates” were there to refresh their knowledge- both first attended 3 years ago.
The FCA membership is just a one-time lifetime payment, no annual fees.
Hope I was able to answer all your questions.