What does Trading Forex Actually Mean?
Forex trading is short for foreign exchange trading. It is the buying and selling of one currency pair against the other. Another name for Forex trading is currency trading. Trading Forex is something you can do from your own laptop from almost anywhere in the world. All you need is an internet connection.
Forex trading is the buying and selling of different currencies for a profit. We trade online using a Forex broker. If a market is moving up, we trade the market by buying it, if the market is moving down; we trade the market by selling it.
As Forex traders we can make money buying or selling. We can make money when the markets are moving up, and when the markets are moving down. As currency traders, all we need is movement, as movement equals potential profit. As a currency trader, we like movement in any direction.
When we say that we are trading the market, or buying or selling, it means that we are placing a trade with our Forex broker. We do this online using their trading platform.
Why should you Learn How to Trade Forex?
Anyone that tries something new, without first learning how to do it, is in for a tough time. This is true for almost everything, and trading is no exception. Learning how to trade the Forex market is a very important step that new traders must go through at the beginning of their Forex journey.
The Forex market has lots of profit potential, but only if you know how to extract that profit from the markets. Beginner traders should learn how to trade the markets for a profit alongside experienced professionals who can help them to fast track their learning process and make sure that they know how to make consistent profits.
Remember that the Forex markets have a huge amount of profit potential, and absolutely anyone can learn how to trade Forex online from the comfort of their own home. Not everyone makes it. It takes patience and discipline to become a successful Forex trader, but it is definitely worth the effort.
Learning how to trade Forex needn’t take up lots of your time. You can learn how to trade the markets in as little as 20-30 minutes a day. You can also create an immediate income, but you need to know 2 very important things. You need to know what to do, and when to do it.
How to Trade Forex… your first steps
Your first steps when learning how to trade the market is to get some high quality trading education. Remember even Benjamin Franklin said that an “investment in knowledge always pays the highest return”. Get the basics covered so that you know price action patterns, cyclicity and which are the best charts to trade. But don’t forget the most important part, which is to make sure that you have a proven Forex trading strategy.
While you’re learning how to trade the market make sure that you’re practicing what you’re learning with a Forex demo account. It’s important to put into practice what you think you’ve learnt, so that you can see exactly what you’ve remembered.
What to do next?
You’re next steps are simple, get your consistency by trading price action patterns that work, and using a proven Forex strategy. Once you have this consistency make sure that you are trading live and able to get similar results to when you were demo trading.
Now simply rinse and repeat, only trade when you see your edge in the markets and continue to trade price action patterns for profits. Make sure that you are trade sizing so that as your account grows, you are risking more money per trade, because if you are losing a little, you’re risking less per trade. Use our trade size calculator to do this.
Your next step now is to make sure that you get yourself in the proper environment and interact with other traders, otherwise trading Forex can become a lonely occupation.
It also helps to have a trader coach or a Forex mentor who is more experienced in the markets and can help you to refine your trading approach and improve your trading strategies. They should also be able to help you psychologically deal with trading as the sums of money get larger.
Let’s get one thing straight. A lot of people start trading Forex only to give up in 3 months’ time. They may start trading again at some point, and you might find yourself in this position, but there’s one big problem.
Trading has to fit into your lifestyle. If it doesn’t fit into your lifestyle, you won’t carry on doing it. So many people start trading small timeframes for hours at a time, put their lives on hold, and try to get rich quick. The sad fact is that this is very unlikely to work for them, as their having to force 4+ hours a day, to the detriment of the other things in their lives such as family, work and friends.
I’ve got a better idea, how about fitting trading into your lifestyle and getting rich easily, without having to force it and without having to find hours a day to trade? Doesn’t that seem a lot more appealing?
Fit Trading into 30 Minutes a Day
If you’re going to fit trading into your lifestyle, you have to be trading the daily chart timeframe. You can’t trade an hourly chart and expect to be able to do it in 30 minutes a day. Trading the daily chart means that there is only one bar/candle per day, so all you need to do is logon to your trading platform when the daily bars close – New York close, and make your trading decisions at that time.
Let’s say that you trade 10 or 12 currency pairs, you’ve got 2 or 3 minutes per currency pair to check if your strategy is setting up. That may sound like a small amount of time, but that leads me on to the next section.
Plan your Trades at the Weekend
A bit of time at the weekend looking through your charts and analysing trend and strategy setups is time well spent. Bear in mind that there will only be 5 new bars per week, you can set yourself in a very good position by doing a little bit of preparation at the weekend. Remember, fail to prepare, and prepare to fail…
Set and Forget
So if the goal is to trade daily charts in less than 30 minutes a day, we need to learn to set up our trades and let them run, coming back to the charts once a day. I’m not going to lie to you; this can take some time if you’re obsessed with always watching your money tick up and down on the screen. It is however, the most relaxing way to trade. Get used to the world isn’t going to end tomorrow. You have a stop-loss in place to protect you, and you can sleep soundly knowing that if the trade does go the wrong way, your broker will get you out of the position.
You see, you really do have to set and forget about your trades when you’re on the daily charts, as the end goal is to make sure that we’re highly focussed when we’re trading, but we’re able to step away from the screen and get on with our normal lives. That’s the way that trading is meant to be.
Don’t’ see trading as a “get rich quick scheme”, as you’ll lose all your money trying, but see it more as something you can fit into your lifestyle and get a little bit richer day at a time. Remember trading is all about compounding, so in 3 to 5 years’ time, you should be in a very comfortable financial position.