8 Steps To Be A Successful Forex Trader

By definition, being a successful Forex trader means being a trader who makes more winning trades than losers, and more importantly, wins than losses.

I found that many traders who quit the Forex market for good after getting badly burned in the first few weeks of their short trading careers have one thing in common: They don’t follow a disciplined, step-by-step approach to getting started. on the Forex trading path. Most traders, even experienced ones from other markets, are so eager to get started that they just start live trading without following a proper plan.

That, in my opinion, is pure suicide. It is better that they donate the money to charity. Trading is not gambling. To become a profitable Forex trader, you need to follow a plan. I have detailed 8 steps that I followed religiously when I first embarked on the Forex journey, all of which had served me well. Now I share them with you and I hope you find them useful.

Step 1 – Forex 101

Before you start doing anything, make sure you learn as much as you can about Forex basics. Understand what Forex is, how it works, how to calculate Forex profit and loss, what are the most popular currency pairs, etc.

Step 2 – Trading 101

If you are totally new to trading anything, arm yourself with at least some basic knowledge about trading. Understand as much as possible about terms such as chart reading, price actions, market trends, breakouts, technical indicators, Japanese candlesticks, etc.

Now, it’s important to note that right after this, a lot of new traders feel capable of entering the market. What happens next is an ugly sight as they become hundreds or even thousands of dollars poorer in a week and walk away from the Forex market forever disappointed and disillusioned. As fancy as you feel after choosing a few ‘innovative and safe strategies to make money in Forex’, resist the urge to start trading right away.

Instead, continue with Step 3 below.

Step 3 – Find a good broker

Getting a credible broker is essential for Forex trading because you need their services to place your trades on the market. However, there are plenty of trades posing as legitimate Forex brokers and hoping to gobble up your hard-earned money. So before you enthusiastically sign up for an account and transfer cash, make sure you do a thorough research on the broker.

Google the name of the broker with the word “scam” after it and see if anything negative comes up. You’ll be surprised to hear horror stories where seemingly well-presented online brokerage sites do great at convincing people to deposit funds with them, but make tons of excuses when it’s time to shell out the funds. Many people are fooled by such trades every year, so make sure that you only sign up with the most credible brokers.

And while you’re at it, look for a broker that allows you to sign up for a simulated trading account. You’ll find out why in Step 4.

Step 4 – Set up a mock account

As discussed in Step 3, you should look for brokers that allow you to set up a simulated trading account. Basically, this allows you to trade virtual money, so you can decide if you like your trading platforms without having to trade real money.

Another obvious advantage of the simulated account is that you can start honing your trading skills without consequences. Most of these simulated accounts give you a virtual sum of money to begin simulated trading and put what you have learned into practice.

Step 5 – Start simulated trading

Now you can start trading virtual money while learning the basics of Forex trading! Now, I would recommend that you trade on a demo account for at least 3-6 months before you start using real money. Skipping ahead doesn’t do you any good, except deleting your account.

I must remind you that you must treat your fictitious account with respect and operate it as you would a real account with real money. Only if you have a sincere attitude towards simulated trading will this do you any good when you start trading real money.

While you are making trading fun, this is the time to learn all you can about Forex trading strategies and train your eye. See Step 6.

Step 6 – Learn, Learn and Learn

It is highly recommended that you pick up some books or eCourses on Forex trading instead of trying to figure it all out yourself. Learning from a good mentor and applying the techniques you are learning to practice is the only way to become a successful Forex trader.

Step 7 – Plan your finances wisely

Surprisingly, many traders tend to skip this step entirely. Remember, trading is not gambling. You must plan your finances wisely and determine how much you can risk on each trade. Each individual has a different risk tolerance level depending on his financial status and personality. But as a general rule of thumb, I wouldn’t recommend risking more than 2-5% of your total trading account per trade. This means that if you have a trading capital of $10,000, you should not risk more than $200 to $500 per trade.

Step 8 – Start trading live

Once you have learned what you can from books and courses and have been doing simulated trading for 3-6 months, and only if you have made more winning trades than losing trades, you can start trading live.

You have come a long way and you should feel confident in your trading skills. However, you may find that you are not as safe as when you are pretending to trade. You may be losing more than before. This is normal, because you are now trading with a real account and the fear of losing and the greed to win are stronger than before. If you can overcome these psychological barriers, you will soon regain confidence in your trading.

Also, don’t make it a habit to trade just because you feel the need to. The market will always be there for you to trade, but you may not always be in the right frame of mind to trade. If you are in a bad mood, don’t trade. If you can’t think straight, don’t trade. If you are tired, please do not operate. If there is no signal to trade, please don’t trade. The bottom line is don’t trade for the sake of trading.