Seeing is Believing but Feeling is the Truth.
Its similar to training in the army where, you can do all the practice you wish and get everything right and feel confident but this training, is very different to being in a situation where people are shooting live bullets at you. The trader in Forex who wins trading dummy money in a demo account, thinks this prepares him for the real world of trading but it doesn't. Trading for real is very hard and if you want to know how hard, read interviews with the top traders of all time and you will notice, how many lost all their money several times before they got on the right psychology and got on the road to consistent profits.
So my first trading advice is don't believe what you read online about how easy currency trading is get ready for a learning curve of experience. Experience is a Forex trading lesson which is not mentioned much online but it's vital, you understand how important it is. I have given other best currency advice, on this site which is don't day trade or scalp, use Forex robots or predictive systems and always, keep your trading strategy simple - so below, I will give some advice and trading lessons which are based upon, my experience of 25 years of trading that are not the usual basics of success advice.
A Business Where Professional Does not Mean Profits
I had never traded but got a job selling investments in Forex and commodities and it was a real eye opener in terms of I thought brokers made money for themselves but how wrong I was – the client losses and the broker, doesn't need to trade to make money, he makes money from clients losses – in spreads, commissions and fees!
The investment world is one which traders think is one where brokers are smart and make money trading – No they don't! They make money from traders and get paid to lose money. I have written about this, in some of the book reviews on this site and if you want two to give you the real world of trading – look up Liars Poker and the Hedge Fund Mirage which will show you the real world of so called Forex trading professionals.
Why Your Opinion is So Important
I very often give trading advice which is the EXACT opposite of what brokers, economists and a commentator might give as sound advice on CNBC and traders often say to me – their pro traders, how can you disagree?
The previous point tells you why. 95% of traders lose so having your own view is no bad thing. Never think anyone's view is better than yours – it isn't. So long as you are confident in it and place a trading signal which has good risk reward, based upon it your opinion the trading signal is the best one. Never worry about following your own advice – it actually is the best advice, once you start trading the Forex markets for real.
The Best Trading Education do What Others Don't
Leads on from the next point – the majority don't make money! Learn to go against the crowd with your trading method. Currency trading success, has NOTHING to do with doing what the majority do, its about following your own path and having confidence in your education and strategy. The fact no one agrees with you is simply not important.
Logical Strategies Don't Make Money
I read a lot about logical ways to trade Forex and trading support and resistance is logical, so to is buying breakouts and learning to trade contrary to the crowd but there is a problem with this way of trading:
If it looks logical and obvious when you look at a chart then, its probably going to be the wrong thing to do! This is because, everyone has the same FX charts to look at and has the same view of what are important levels so this means, if you trade the set up in the same way as the majority you will lose. You will enter your trading signal at the same level and want to exit at the same level so the market will take your money.
You can have a simple Forex trading strategy but you must always think of what the majority are going to do when they trade the set up you are looking and if its obvious to everyone else – its obviously wrong.
Stop Losses and Temptation to Run Losses
People always tell me – I will never be tempted to run a loss, I know how important stops loss order are and yes, most people do until they start to experience losses in the market then, emotions take over. If you ever watch the news, you will see, professional traders running losses and giving banks and brokers huge losses. I am sure, you probably think how could they do that their professionals? There is no one, who is immune form emotions and I once moved a stop loss back ( the loss at the time would have cost me $10,000 and it ended up, costing me “220,000 in losses) Why did I do it?
My emotions got the better of me and they do sometimes of even the best traders. Always trade with a stop and a get out area and don't change it, once you have entered the trade. Simple currency trading advice? Yes it is but it's just so important, if you want to trade currencies successfully and avoid the majority of lossers.
Try Try and Try Again!
You should never try and trade a currency pair after you have lost. I have seen this given as sound currency trading advice numerous times but it's rubbish. The fact you have lost on a trade in a currency pair, doesn't mean you shouldn't try again. Your view might have been correct, all that was wrong was your market timing.
I have taken small loss after small loss, trading a currency pair and then, seen a huge profit come from the next trade I took. Never be put off a currency pair because you lost trading it and on the other hand, never favour a currency pair if you have made money on it, every chart set up is one you should look at and forget your past experience with it.
Simple to Learn But You Need to Understand Trading Psychology
The Forex trading advice, I have given here and elsewhere, on this website should lead you to an obvious conclusion which is:
Currency trading is easy to learn but the real problem when trying to achieve success is – handling your emotions and trading with the minority. Anyone can learn Forex and win,you don't need to be a nerd, work long hours or have a complex trading system but what you do need is - the right psychology and also, the confidence to follow your own path to success. If you have understood the currency trading lessons above, you can make money trading the Forex markets.