5 things to learn before getting into Forex
Once you have decided to become a Forex Trader, there are several things that you need to understand and learn before getting into Forex.
What is Forex?
Before we get into the five things, let’s learn more about Forex.
The Foreign Exchange Market or Forex is where currencies are traded. Now you may not realize this but this is something that is very critical to everyone around the world.
Why? Let’s say for example you live in United States and you wish to buy some cheese from a business in France. Well your money has to be converted over to the Euro since that is the currency accepted in France. Likewise if a French tourist went to Australia they would have to convert their Euros into Australian Dollars since the Euro would not be an accepted local currency in Australia.
It’s interesting to note that this aspect of the market has no central place. You see trading in this market is done electronically, over the counter, which means all transactions occur via a computer. The Forex market is open 24 hours a day 5 and 1/2 days a week thanks to markets in Sydney, Tokyo, London and New York. When a trading day ends in the United States, the next Forex day begins again over in Sydney. Thus you can trade Forex anytime during that time that the Forex Market is open.
Here are five things that you will need to learn before getting into Forex.
You Will Lose Money
Many people who hear about Forex think that they are going to become a millionaire in a year. This is simply not true. In fact if you are thinking of starting Forex Trading to become rich, you need to reconsider your options. Creating instant well is not a realistic goal. There are way too many factors that come into play in the Forex market for this to happen.
No we’re not saying that you’re going to get into the Forex market and immediately start losing money. What we’re saying is that you have to be careful in how you place your trades, how you manage your risk and your mindset in order to be a successful Trader. Even with these guidelines being followed you will still have losing trades, and you might even blow your entire account.
The first thing to learn before getting into Forex: Don’t be afraid to take a loss.
You have a lot to learn
Learning is something that we are always doing. Anyone who is a responsible trader will tell you that they are always learning. In fact learning is something you will do a lot of during your Forex Journey.
Along with that learning will come patience. You see you are not going to instantly change your financial status getting started. You are not going to instantly become wealthy. You are not going to start winning every single trade you take right out of the gate. Along with that learning curve comes patience. You must have the patience to learn and understand what is happening in the market. Without patience the chances are quite high that you will blow an account.
Thus the second thing to learn before getting into Forex is that you have even more to learn!
Track your trades
A trading journal is a very important aspect of trading. A journal lets you see what trade you took a week ago or a month ago, so that you can look back and see why you got into a tree. You should write down every single trade that you take in a journal, and refer back to it often to continue your educational process.
What type of information should you record in a journal?
You should absolutely keep track of the pair that you traded, along with the time of day. You should also track your entry price, your take profit price, and your stop loss. You might even keep track of what information you used to determine that this was a viable trade. As you go back and look over your previous trades, a process sometimes called back-testing, you will be able to see how you personally trade. You’ll be able to see the trends that you have identified and that you are trading on.
Tracking your trades is a very important thing to learn before getting into Forex.
Don’t Over-Complicate Trading
Remember the acronym KISS? Keep It Simple Stupid? This is something that everyone who wants to become a traders should learn before getting into Forex.
In the grand scheme of things trading is placing a buy or a sell on a particular currency pair. That’s it. If you start to over-complicate your own personal rules for getting into a trade you are going to send yourself into despair. You will begin to doubt your abilities as a trader, because you put so many rules in place that you can’t even keep track of them all. Once you take on a losing mindset, the losses will just keep coming.
Actual Forex Education
After you have found an educational resource for Forex education, you’ll start learning things such as stop loss, take profit, harmonic patterns, pitchfork and various other terms. There are a lot of terms we could put in this article that might only confuse you at this point. But think of Forex as building a house. The foundation of a house is what everything else sits on top of in the finished product. Likewise a strong education in the basics of Forex will help you further down your trading career.
As you spend more time in the Forex markets you will see various patterns emerging. You will see little Concepts that seemingly had no value when you were learning them, now suddenly play a major role and how you analyze the charts. That’s it is a very important to make sure you do the homework and actually study the basics of Forex.
Those are the 5 things you need to learn before getting into Forex. It may seem that some of them do not relate to trading at all, as time goes forward you’ll realize just how important that are.
If you want to learn more about Forex trading then we suggest you consider IM Mastery Academy. You will find the link and more information below.
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