I bet that most of you here in my blog are interested in making an extra income from trading and there are definitely some who wish to eventually become a full time trader and quit their boring day job. Regardless of which category you fall into, I have written this post to give you an overall idea of where to start.
I have received emails from readers of this blog telling me that they are forex trading beginners and do not know where to start. Therefore in this post, I will share with you the steps to slowly learn the rope to trading and eventually make money from trading. I am not sure whether all of you can become a full time trader one day but I am sure that all of you will be able to make some money from trading one day if you continue to work on it.
If you are a forex trading beginner and have no idea what to start from, I hope that this post will shed some light for you.
Step 1: Learn how to identify support and resistance
This is what I think is the most important thing that all new traders must learn. If you take a look at the forex chart without understanding support and resistance, it will just be a chart full of messy candlesticks. The reason why the price moves in waves is because it is being repelled by the supports and resistances. Therefore in order to understand the price movement, you will need to know where the major supports and resistances are.
Step 2: Learn how to draw correct trend lines
I strongly believe that all traders need to know how to draw the correct and most recent forex trend line. Some of you may think that trend line is so simply, isn’t it just about connecting swings highs and lows? In fact, most traders never draw the right trend line and that is why they start to think that trend lines don’t work. Trend lines are part of support and resistance and it forms the majority of all support and resistance.
Step 3: Pick up a trading strategy of your choice
After you understand all of the above, you will be able to decide on a forex strategy of your choice. It is very important for you to stick to one or at most two strategies at one time. The problem with most new traders is their strategy hopping habits. When they start learning a strategy, they expect it to make zero loss. Once they experience a loss in trading, they start to wonder whether the strategy still works. Next they will start to look for another strategy to learn thinking that it must be better. In fact, the key to success in trading is to stick to one or at most two strategies and then practice it to perfect your execution. It is okay to have a few losses as there is no strategy that wins 100% of the time.
If you want to learn the exact strategies that I am using to trade for myself and user of my forex signal service, you can take a look at my course below.
If you currently is working on a strategy, you should stick to it and stop thinking about what I list above. If you are new and do not have anything on hand, these are great strategy that you can consider.
Step 4: Start with a demo account
No matter what strategy you learn and who you learn from, you should always practice it on a demo account for at least 3 months. This will give you a better understanding of the winning percentage of the strategy. I will suggest you to record down the number of wins and losses you have taken from the strategy so that you can have a better understanding of the winning percentage. A decent winning percentage is anything around 70%.
Step 5: Move on to a live account
If you manages to trade profitably for consecutive 2 months, you are ready to go LIVE. If you are unable to produce consecutive demo profit for 2 months, I suggest that you should continue in the demo mode. If you find the strategy to have poor winning percentage after 2 months, I will suggest you to discard it and then learn another one.
The whole process will take sometime but trust me this is the best investment of time you have ever done for yourself. Once you manage to find a reliable strategy and is able to execute it well, then you have acquire a skill that is able to make you money for the rest of your life. Therefore it is worth the time and effort to learn and eventually make money from it.
I hope that this post is useful for those of you who are new to forex and have no idea what to do. Every step listed above takes time to do it, a few days is not enough.
If you are willing to spend the time, you can continue learning and eventually make money. If you feel that it is too long for you and you want to find some short cut to make money from forex within the next few weeks, I have to tell you straight that it is not possible.
Note: Do note that all the forex trading strategies that you learn on YouTube are general strategies, please do not trade live account with them as you will get your account wiped out. I have readers who told me that they lose several thousands dollar in trading and when I ask them what strategy they are using, they told me that they learn from those YouTube videos. YouTube videos is a very good way to learn trading but all the strategies taught there are general strategies that have not been fine tune yet. A portion of those videos that you see there are created by marketers trying to get you into their website to buy their signal service or course. Therefore I will advice all of you to practice what you have learn on YouTube on a demo account first to see if it is effective before you trade live. This will prevent you from losing your hard earned money.
Below are 2 useful posts that can help you to improve your trading skills
If you guys have anything to share, do feel free to give your comment below as it will be very valuable for readers here.