Forex Trading Strategy – How Do You Succeed in This Business?
He was like so many eager traders I’ve seen before. A well groomed, earnest young man who looked at me expectantly as crowds of people swirled around us at the annual Dubai forex trade show.
“Tell me,” he said, “how do you succeed in this business?”
Normally I would have launched into my stock answer about learning the key economic calendar events of G10, the importance of following the latest news and the need to practice on demo account. Blah. Blah. Blah.
However, something about the guy touched me and I replied with complete honesty.
“Want to really know how to trade?” I asked rhetorically.
“There is only one way. You open an account and just trade.”
“But what about education, what about training?” he asked surprised at the bluntness of my answer.
I smiled and shook my head.”If you were studying to be a lawyer, a doctor or an engineer, that would be the way to go. But trading is different. In trading you need to do first and learn later. Until you’ve done one thousand trades you can’t even begin to understand this game”
Trading is indeed different. It requires practice first and education second. That may seem counterintuitive but it is not. Trading at its core is the discipline of learning to minimize your mistakes. \Trading is such an unpredictable endeavor that it can never be taught in formulaic way like engineering. In trading professional perfection is impossible even if you know all the proper rules.
To master trading you need to experience the frustration of selling when you meant to buy, the utter shock of an instant three hundred point price move against you, the annoyance of seeing the spreads widen just as you are about to reach your profit target and a million other little disasters that they never tell you about in trading school.
Most importantly you need to learn about yourself. What mistakes will you make when you trade? Will you trade without a stop? Will you add to a losing position? Will you trade in revenge for an unexpected loss? Will you rush your entry? Will you exit too soon? Will you do all of this and more?
Only after you’ve traded blindly for a while can you begin to understand what it takes to succeed in this business. And only then will you become receptive to a proper trading education. Trading is first and foremost an exercise in psychology and although many gurus will promise to provide you an ironclad mindset, the truth of the matter is that this skill can’t be taught. Confidence comes from competence and competence comes from endless rounds of practice and thousands of mistakes.
So if you really want to learn how to trade just trade. And keep trading and trading and trading and just like a baby who stumbles hundreds of times before he finally finds his balance and learns to walk, you will eventually begin to master the market.
Of course if you trade live without any practice the chance of losing money is almost certain, so its important to trade very small and trade only with capital you can afford to lose otherwise you should trade on a practice account.