How To Become a Professional Forex Trader – Part 1: Building the Foundation

How To Become a Professional Forex Trader – Part 1: Building the Foundation

Already a Member? Log In to Your Account

How To Become a Professional Forex Trader – Part 1: Building the Foundation

How To Become a Professional Forex Trader – Part 1: Building the Foundation

Source: http://www.learntotradethemarket.com/forex-articles/how-to-become-a-professional-forex-trader-part-1-building-the-foundation


In the article, Nial Fuller writes about 3 Basic and important step when coming to becoming an aspiring professional trader or making it as a career. The only thing in Forex business is that you are required to fork out real money in order to take part in the daily 4 trillion turnover, and you risk losing almost all your investment. It's not as easy as it seems and almost 95% of all retail trader fails, due to LACK OF FOUNDATION.

Step 1: Be honest with yourself

Consistently successful trading and professional trading might sound like the same thing, but they are not. Your aim should first be set on making consistent money each month relative to your account size, not on becoming a pro trader right out of the gate.

You see, if you have a $1,000 trading account for example, you will not be able to make enough money each month to live off of, and if you try to trade your $1,000 account like it’s a bigger account, you’ll end up blowing it out.

Step 2: Learn the basics of Forex trading

Next, if you have fully accepted that you need to focus on the process of trading rather than the money, and you know you aren’t going to get rich quick on a small trading account, you should focus on actually learning to trade.

Step 3: Learning to trade with an effective strategy

After you have completed steps 1 and 2, it’s time to learn some real-world trading strategies and really start getting into the “meat” of Forex trading. Now, there are thousands of different ways to trade the market out there, but if you want to learn how to read the raw and natural price dynamics of a market, I suggest you learn to trade forex price action strategies. By making price action trading your primary trading strategy, you will develop chart-reading skills that will last a lifetime and make any other strategy or system you use even more effective. As you probably know by now, I am a huge proponent of “pure” price action trading, and I really feel that it’s the best way to trade the Forex market.

----------------------------------------------------------------------------------------------------------------------------------------------------------

1) Nial Fuller mainly talks about being realistic and humble when coming to live trading, pips are what we are looking out for, by leveraging your account, you are not watching your risk but looking for quick and massive gains; which most of the time is counter-productive and only acts against you and kill your trading ethnics.

2) As mentioned in my beginning explanation of The Secret Trading Plan, foundation is the key to success in Forex. It does not require you to study a degree, or be a pro in mathematics or having complex understanding with the economic aspects. Sometimes, Forex should be kept as simple as it should be, this is with the aid of building consistency in your trading and stick to follow a training program. You may choose to pay or spend money learning in Forex school, but what they teaches you may be counter-productive as well, as every individual have their own personality and psychology factors; different strategy and trading plan works for different person.

3) Consistency and watching risk, is the key aspect to trading. Its ok to lose a little at time, but not to lose more than 2% per trade as you will need to earn more in order to recover your initial investment positions, which can be detrimental to trader's psychology; which most trader used through increasing their leverage and risk appetite to chase gains than to watch risk. Nial fuller mainly teaches larger time frame trading,  which is quite predictable and is more reliable compared to smaller time frame; this is due to the changing of trend and moving average which explains per time frame buying and selling, and market's volatility. You have a period of 4hrs, 100 persons buying and 70 persons selling, eventually its going up, isn't it simple? Still price action may not be suitable for all, price action requires people to be patience and have bigger stop loss gaps, waiting longer for price entry and exit, and train to trade like a sniper instead of a machine gunner. If you are a person who cannot even wait to queue in a super market to purchase your important item, price action ain't going to be suitable for you.

---------------------------------------------------------------------------------------------------------------------------------------------------------

You do not trade a demo account for building your foundation in Forex
Let us not forget and be warned that trading demo accounts should be avoided at first hand, a trader should not start with demo account as the money and capital is unrealistic, you are winning and losing virtual money. Most of the time your trades are entered without a careful analysis of  the market, you can choose to cut your losses anytime and up your leverage to chase back the losses, but this is not really possible in live account.

Instead of trading a demo account, you are going to start with a micro account, a $5-$10 dollar account. With lot size of 0.01, which is about 10 cents per pip that you are earning/losing. Even if it reaches 30 pips or 20 pips stop loss, you merely lost $2-$3 dollar. Still its is real money, its more likely you trade with guts and guard; than just trading a demo account which you lack emotions in trading it.

This is explained that you goes to an arcade to play a Car racing game, you lack of adrenaline and stress rush compared to a Live Racing competition. You risk to speed up and make dangerous turning point or drifting, you train a lot in simulation in an arcade game, but it ain't going to be practical or realistic when it comes to Live racing, you probably going to be chicken out; live and death are at hands you will feared to make turning points, you will slow down and not act irrationally. If you act to rush, you probably get yourself killed, just like having your accounts blown up! In an arcade game you probably get to restart and a new car is created or at most  your body parts are damaged. In live racing, once you hit, its game over for you. You cannot continue the race, you may end up in hospital and may even face death or injuries to yourself.

Therefore, its highly advisable and recommended not to start a demo account. Start with a micro account with 0.01 lot size. Use only max 2 trade per time. And put your initial stop loss at 20-30 pips, until you discover yourself your own price entry mistakes or how to manage your stop loss pips accordingly to your personality and risk appetite. Never choose a trading plan that you can't follow or respect. Respect your stop loss, respect your trade. Admit that you are wrong early, unless you are experienced in handling different situations.

------------------------------------------------------------------------------------------------------------------------------------

Beginners should learn how to trade in Asian Market and New york market before handling the big  game, in London Market. Your basics of indicators and moving averages or trend line is more reliable in Asian and New york timing. Don't participate in a professional race, even the best of the best avoid trading Forex in london hours, unless you are an inter-bank trader which leaves your no choice. If you are just trading leverage Forex through brokers then simply avoid london hours, and you will more likely to see progression in your portfolio.

Learn to drive a real car, practicing make perfect. Just like why many gamers practice day in and day out, before entering a competition. Its the same as Poker when it comes to Forex, real guts, real precision, and knowing when to cut your losses, and maximize your growth. Remember you are chasing pips and watching risk, not chasing quick gains! Not 50% or 100% per trade. Don't be fooled by binary options ! Its the same as gambling.

Stay tune for other topics and The secret trading plan chapters...

Let us not forget, Price entry is the most important!

 

 

www.life-answers.org

life answers

  Article Info
Created: Mar 30 2012 at 09:58:40 PM
Updated: Mar 30 2012 at 09:58:40 PM
Category: Finance & Investment
Language: English

  Share
Stumbleupon
Digg
Delicious
Reddit
© 2006-2014 OnToplist.com, All Rights Reserved