FULL INSTRUCTION OF HOW TO BECOME A SUCCESSFUL TRADER
“How to make money on Forex?”, “How to start?”, “How to make money on Forex?”, “How to become a successful trader?”, “How much can you earn on Forex?” – these are typical questions that people ask, for the first time on Forex. Many comes to financial markets for quick profit and financial freedom, which is so zealously promoted by forex brokers in their advertising campaigns.
But there is a problem: an unprepared person can easily drown in tons of information in the Internet. You can find hundreds of books on trading, dozens of a variety of courses of trading, thousands of various strategies and techniques for trading. In this cycle, you can easily get lost and do not understand what you need to do and where to start.
In this article, we will answer all questions related to earning money on Forex, and step by step analyze what is necessary to become a successful trader.
BASICS OF TRADING
The first thing to do is to learn the basics of trading on Forex. This includes the history of the appearance of Forex, the principles of the market, types of analyzes, trading sessions, trading instruments, etc. Also it is worth to get acquainted with the trading platform. I would advise you to start with the most popular platform – Metatrader 4.
All this is necessary so that in the process of studying the subsequent material you do not have unnecessary questions on the theory and the training passed faster. In addition, the lack of Forex bases will only hinder you in trading, which is unacceptable. The only way out is to spend some time getting basic knowledge.
Sources: Forex bases are the same, so there is no special complexity of choice. You can find on the Internet any book on Forex on the general theme and there you will get all the necessary knowledge.
I advise you to familiarize yourself with the slang of traders. This will facilitate your communication with colleagues, which never hurts.
FOREX TRADING STRATEGY:
- trading analysis
- risk management
- trading psychology
1. TRADING ANALYSIS.
These are all tools and algorithms that you use to make trading decisions, search for entry/exit points, market analysis as a whole.
There are many different strategies that are in the public domain. We will not analyze what works and what does not. This is the topic for one of our next articles.
I’ll advise you what brings success to me, and many other successful traders:
а) Trading using volume!
Of course, in addition to volumes, I use several other tools, such as cluster analysis, open interest, sentiment, etc.
If you’ve never heard of volume before, I suggest that you familiarize yourself with the VSA strategy (volume spread analysis). It will be a great help for your personal strategy.
If you use price action, then the volumes will serve you as an excellent filter for more accurate enters.
b) Trade against the “crowd”!
It’s no secret that the market earns large players, and the “crowd”, in general, is losing money. So why be in a herd of sheep? The sentiment gives the concept, in which direction the majority of market participants are trading. Accordingly, in most cases, we need to look for an entrance in the opposite direction. The mood of the crowd is an excellent addition to the trading strategy, but making trade decisions only on it will not be reasonable.
c) Trading by the trend!
Trend trade is considered the most profitable type of trade and not for nothing. In time getting up on the trend you can get a very good profit.
Trends are divided into long-term and short-term (local). You look at the one that is more suited to your strategy. If you are trading within a day, then pay attention to the short-term, if mid-term and long, then, respectively, the long-term trend.
DO NOT ATTEMPT TO SEARCH FOR A TREND!
In 99% of cases, you will receive loss.
If the instrument is in consolidation, it is better not to trade. If experience allows you, and you feel self-reliant, you can try to trade from the boundaries of consolidation.
d) Do not trade before or during the important news.
This is a very profitable, but at the same time very risky type of trade. If you are a beginner, do not try to trade on the news. Or you will merge yourself, or the broker will help you in this! Therefore, you always need to be aware of what news will be to know when it is better to leave the market.
e) Do not hold positions on the weekend.
On Monday, the market can open with gap and you can lose even more than the size of your stop. For the weekend, it makes sense to leave, if the price has already sufficiently departed from your order in your direction, but the goals have not yet been achieved. This is more about medium and long-term trade. If the price has not gone more than 50 points in your direction, it’s better to cover the position. You can always rediscover it on Monday.
f) Do not try to find the Holy Grail!
IT DOES NOT EXIST! There is no such strategy that will allow to close all transactions in a plus. IT IS A MYTH! Learn, try, practice and you will succeed. Your strategy should be the first one for you. Therefore, if you even take a ready-made strategy, you need to adjust it to yourself so that you can comfortably use and trade with it.
For more details about typical mistakes of a trader and how to avoid them you can find out in the article “10 common trading mistakes”.
2. RISK MANAGEMENT.
The most undervalued, but very important aspect of trading! It is thanks to a well-thought-out risk management that professional traders even earn in bad periods of trade.
If you have a well-functioning system of risk management, and you clearly follow it, then it will be very difficult for you to merge!
Therefore, I always advise you to pay special attention to this point of the trading system!
Risk management, like the entire trading system, must be unique and appropriate for you, so everyone decides what risk to take. I will give only general recommendations:
а) DO not risk more than 1% of the deposit per 1 deal.
If you are a super risky guy and always the first to climb the embrasure, then you can take 2%. This risk will allow you to withstand even a series of unsuccessful transactions and not go into a deep drawdown.
b) Minimal risk/profit ratio should be 1 to 2, better 1 to 3 and higher.
Another feature that will allow you to stay afloat even in the most difficult period. It is thanks to a positive mathematical expectation, you can even trade with 30% of profitable trades in a plus. And in good times, this approach will help you to properly cut the dough!
c) Same stop losses.
In order for the previous risk management chips to work, it is necessary that all stops are of the same size, at what is the monetary equivalent, rather than the number of points.
This is an indispensable condition for stable management management, which many ignore. Yes, you can go half the volume when you are not sure, but at the initial stage I would advise you not to enter transactions where you are not sure.
d) Overall risk of all opened deals should be around 3-5% of the deposit.
This means that if you take a risk for one position at a level of 1% of the total amount, you can simultaneously open 3-4 transactions, not more. At what transactions should be on tools that are not correlated. Those. It would be foolish to open all 4 deals on dollar pairs, which are very dependent on the dollar. Open one transaction for the currency, the second for the commodity (for example, oil), the third for the indices, the fourth for metals. In this case, the probability that all your trades will be closed in the foot is minimal (if, of course, the stops are set correctly).
As you understand, under such a system of management risk, I always put my feet. In all 100% of transactions! Take profit I do not put at all. I’ll explain why: there have been times when the price after the achievement of the set goals continued, so I closed the deal with the risk of not 1 to 3, but 1 to 8. If I used the take profit, I would lose a lot of my profit, and in Trading is unacceptable.
The conclusion: If you adhere to these simple rules of risk management, you will create a powerful foundation for your success in Forex trading.
3. TRADING PSYCHOLOGY
The most insidious aspect of trading. Often newcomers ignore it and the result does not make you wait. In the context of trading, psychology refers to emotions such as fear, greed, passion, lust for revenge and euphoria. Next, we list the most common psychological problems of the trader:
Do not chase after easy money and quick profit, there are not any on Forex.
Yes, you may be lucky, and you will cut down the dough first, but in the end you will lose more.
Come into the market only when your trading system gives a clear entrance. Do not try to constantly be in the market or invent the entrances where they do not exist. It will not end well.
Do not be scared to trade.
Only by practicing, you will be able to learn to see, understand and read the market as much as possible. Exactly this is what works best on forex, if, of course, to draw the right conclusions.
Do not try to recoup on the market.
If you get a stop loss, then take it as granted. Do not try to immediately enter the market to make up for the loss, especially not to overstate the risks. Under the hot hand you can lose even more. Just do your job: look for good deals and stick to the trading plan. Only in this way you will be able to cover losses and go into a plus.
Also, do not fall into euphoria.
Even if you close several deals in a row in a solid plus, do not think that you now conquered the market. Trading is a treacherous thing, where profit borders on loss. Do not overestimate the risks, even if you have a series of good deals, otherwise at one point you will receive a solid loss, which will then have to be worked out.
So set yourself up for a serious and painstaking work and all you will succeed.
More details about psychology read in a subsequent article.
Also, I want to talk about discipline separately.
It is one of the main factors of deposit sinking. It is the lack of discipline that forces you to believe until the last moment that the price will unfold and not close the position. It is because of her absence that you want to close a position that has not yet fulfilled its goals, because the price starts to go against you and you are afraid of losing profit.
The lack of discipline forces you to repeatedly violate your trading strategy, which is fraught with negative consequences.
The conclusion is simple: if your system showed an entry and you entered the market, then exit or stop a loss, or to achieve goals. Of course, if the market starts serious moves and they are not in your favor, you can exit the deal. But only when there is a really serious reason to do so.
Only by adhering to strict discipline you will be able to:
- a) check whether your vehicle is working and identify errors;
- b) if he works, then earn money;
- c) if it does not work, then make adjustments and make it work.
After all the teachings, training, it’s time for a real account.
I want to make a remark that you have to have a demo account while learning the basics of forex. It’s on the demo that you will be the first 1-2 months to perfect your skills.
But still, I do not advise you to sit on the demo account for a very long time, in view of the fact that it does not give a full sense of trading, since you are not trading for real money. This is a critical factor. After all, when you trade for your hard earned money, in your head there are very different processes than during trading on the demo.
I have seen a lot of “demo heroes” in my entire trading practice. Which on the demolition break the market, but in real life for several years in a row poured. One of the reasons for this is the psychology of real money. So do not masturbate in the demo for years: learned to use the platform, sharpened the strategy, and gained confidence in the battle.
Before opening an account with a broker, I advise you to read the article “15 rules of choosing the best forex broker” or order a free consultation with FxAdvice.
This is a very important issue, because the broker is the link between you and the market, so you have to take care of this issue painstakingly.
After you have chosen a reliable forex broker for your trading, it’s time to start trading.
I advise you to start with a small deposit, no more than 1 thousand dollars. Personally, I started with only $400.
This is quite enough for your practice and you do not risk a large sum of money.
During trading you will have good and bad trades. I advise you to take screenshots of very successful transactions, as well as all transactions where you caught a stop. Analyze these transactions and strive to increase the number of the first and reduce the number of second transactions. This is the path of self-development that everyone must go through.
And then only practice, practice, practice!
When you gain universal confidence, when you do not have big discrepancies in the results from month to month, I would advise you to start thinking about attracting investors and trading on their money. It is much more profitable for you and at the same time you absolutely get rid of risks. This is what I call professional trading! This is what every person who wants to make trading a part of his life should strive for.
If you go through all this and really become a professional trader, then when you look back and look at the path that has been made, you will realize that now for you in life there are no longer insurmountable obstacles!
The bottom line: it depends on you how much you will earn in Forex and whether you will earn at all! Will this become your main occupation or just an unsuccessful attempt to change your life! I can say one thing for sure – it’s real! Only hard work and patience will bear fruit to you!
BONUS: ANSWERS TO THE MOST FREQUENT QUESTIONS OF BEGINNERS
IS IT REAL TO MAKE MONEY ON FOREX?
Absolutely real, but hard! If you really want to earn money on Forex and are ready to work for this, then you will succeed! Do not rely on quick enrichment and easy money, otherwise your money will be easy for someone else).
HOW MUCH CAN I MAKE PER MONTH?
I believe that if you reached a 10% stake a month at a maximum drawdown of 20%, then it’s great. Of course, I know guys who are 20% and 30%. But there the risks are higher. So here is a stick with two ends.
In addition, 10% per month for small risks is a tidbit for investors. They will be willing to invest in such a manager.
HOW MUCH TIME DO I NEED TO BECOME A SUCCESSFUL TRADER?
Here everything is individual. If you study and try everything yourself, then at least a year, or even 2. If you take good courses, then maybe 6 months, but on condition that you work hard.
What is the maximum allowable drawdown?
As I said before, it is desirable that no more than 20%. But if you do not merge the account, then it’s already good)
If the drawdown is greater, it does not matter. Just reduce the risk and try to analyze your trade, avoiding the deals that bring you the greatest loss.
HOW CAN I BOOST THE DEPOSIT ON FOREX?
No way. Do not even try, you will not succeed. Only merge. Dispersal of the deposit – overstated risks – loss of part or all of the deposit. Even if you are lucky, then later you will lose money anyway. It is better to adjust to a long-term process and go to the goal. If there is no desire to wait, but want to earn, you can invest in trust management.
In the comments write your thoughts about the guide, what would you like to add or learn about a particular step in more detail.
If you have any questions, add to Skype – vovkfx, I’ll be happy to help you.
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