Many people think that the most important thing is the size of the deposit and how much money you can earn by fx trading. At first sight, it’s normal, but let me remind that the most important thing in forex and other markets are to avoid losses and keep your capital. If you can do it, second goal target is a gain.
Many traders and newbies they are just focusing on trades and earnings, but in shouldn’t be priority if your only strategy is to sell highs and buy lows you should know that the probability of having profit is not on your side.
So if you know some basics and technicals you think that you are ready to trade. Possibly.. But I can guarantee that only beginning. Most important things in financial markets are psychology and discipline.
Some things you have to prepare before you can become break even and later profitable trader:
1. Have basic trading knowledge or even more
We all understand that without the skills we can‘t be successful, and we must remember that all spheres people with knowledge always have an edge against people without it. I suppose it’s common sense, without knowing you can’t be profitable in the long run. You have to learn many things and always learn more.
2. Make a demo account for trading practice.
I know that many people don‘t agree with this sentence. Really, I have never had a demo account. Today I can say it‘s a big problem, but naught can be done today about this my decision. If I had started fx trading with demo account, I guess, I could save tons of money and especially the nerves. In my opinion it’s vital, your trading has to originate only from demo trading. If you have made some trades and see that you can be profitable, only then go to real account. From today’s view, I can say that trading with real money and attempting to find some „super“ trading schemes is not your best choice. Examine everything in your demo account, keep learning, try your systems and strategies only in demo account first.
3. Have fx trading plan and strict rules
Don‘t trade randomly, test your forex trading rules in your demo account. Rules will be your confirmation criteria to open a trade. The second critical thing is that your conventions will help you not to deal if you are not sure, or need more confirmation points.
4. Keep risk and money management
It’s a fundamental of trading. I think Forex risk management is, even more, important then trading strategy.
5. Feel comfortable with your trades
In that substance, then you have active trades, all these trades are open with proper risk management, right size, and if these deals end up with losses it won’t reach your extreme risk level.
6. Keep a forex trading journal
It’s a powerful tool. Write for yourself about each trade before you enter, and write about it after exit.
7. Analyze your trades
It’s similar to point 6, if you have your journal, you can examine your past trades from time to time and write additional notes to improve your future trading.
8. Learn every day
Don’t ever stop learning. If you have time, after preparing for a trade and enter to it, use this time to read. There are so many resources on the internet about it, use Twitter, YouTube, websites, etc.
9. Follow some people who are trading professionally.
I created a twitter account to follow serious posts about trading, markets, and economy. Of course in Twitter nowadays there are, so many streams, just try to follow people that you truly like.
I think these nine things are necessary for your trading. I am not saying that without these things you can’t be profitable, but I guess that these things can help you to become profitable.