Sometimes the learning process of trading forex can be tedious and long winded. There are however a few things you can do to speed up the process.
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Number 1: Try Scalping [/B]
When I first started out in forex, the word 'scalping' was a bit of a dirty word. I was taught moving average crossovers, bollinger bands and other techniques that entailed waiting on daily candles to do their thing.
Trading longer time frames is great, you do need to know what price is doing on the macro scales to find directional bias/ support and resistance levels. That being said the forex market does work on a fractal scale, meaning, there are patterns of self-similarity on all time frames. So while you are waiting for a daily signal at a particular level to occur you can certainly take advantage of a multitude of trading opportunities intraday.
Because you can be take several positions per day scalping, you get a handle on many aspects of trading a lot quicker.
I highly recommend adding a scalping system to your bag of tricks. The high frequency of setups (5 – 20 + per week) allows you to engage in the markets a lot more, hence speeding up your experience in managing positions and really paying attention to the smaller intricacies of price action. You also are able to discover your unique emotional and psychological profile as a trader. Another critical part of the learning process.
[B]Number 2: Back-test[/B]
Back testing is not just a good idea it is ultimately crucial to your trading success. It doesn’t matter if you have bought the best trading system in the world and it makes the creator millions of dollars each day. It’s not your system, so it’s not going to work for you the way it work s for him/her. You can however back test it, break it down, and tweak it to your own personal style of entry, risk and trade management etc.
I cannot emphasize enough how important this process is. If not only to confirm your hunch (or the sales pitch when you bought it) that is does in fact work, but why does it work? What is the maximum drawdown period? What currency pair(s) does it work best on? How will YOU manage the position if it goes against you? How will you manage it if it goes into profit? When will you bank profits? When will you close the remainder of the position? what about your stop?
I think you get my drift, this really is where the magic of trading forex starts to happen, so get in there and do the hard yards.
[B]Number 3: Trade live[/B]
There is only so long you can sit on the side lines trading paper money, before you need to bite the bullet and trade with real money.
“Speculators who trade imaginary money are no different from a crack shot in a pistol range. How would such a crack shot do in a duel, facing an opponent’s loaded pistol? That is when fear raises its ominous head, nerves fray and split, resolve is challenged and reason fled”
[B] Jesse Livermore[/B]
-The greatest stock broker of all time -
Although I do strongly recommend that you demo for the period of time, you do need to back test various theories or strategies (whether purchased or better yet, your own). Trading live will allow you to develop the psychological side of your trading. Having real money on the line can toy with your emotions. It can have you making fear based, illogical and emotional decisions. Having these experiences will allow you to begin exercising discipline and controlling your emotions when trading. Making mistakes is part of the process of becoming a trader.
I do advise you only risk what you can afford to lose and have a sound risk model before engaging the market.
[B]4. Invest in yourself[/B]
If you have already done a course in forex, and you are still unsure exactly what needs to be done to become successful in this game, then maybe consider revising it or even doing another one. Sometimes you don’t get all the answers you seek from just one mind or one point of view.
I personally have sat through 4 full length courses, with 4 different coaches. Some of the information overlapped, but a lot of it was very new. The last one I did brought everything together for me. Get as much information as you can from as many different sources as possible! No coach or training institution is the be all and end all of trading forex. If they claim to be…. Think about moving on!
Well guys and girls, I hope I have given you some ideas on how to speed up the learning process in forex. Remember trading is not a skill, but a discipline. So work on developing mind-set as well as your skill set.
Good luck with your trading
Ben McInerney
ps. I’d love to hear everyone’s thoughts on the above