Forex market insights: For someone who plans to start a Forex career, it can easily get overwhelming. The amount of information found on the Internet about the Forex market is massive and, in most cases, confusing.
The following 3 Forex market insights are things that you must absolutely be aware of before you even consider to place your first trade. No matter what you’ve heard, read or seen, these market insights should be like a Bible for you. I’m telling you honestly: if I had known them from the start, they would have saved me a lot of time and money…
Without further ado, let’s get started and present the 3 golden Forex market insights you need to know before trading.
Forex Market Insight #1: Tune up your needs & goals on the same line with your motivations
Being realistic with yourself is one of the hardest things to accomplish in many aspects of life and even more in the Forex market. That’s why the first step you need to make before venturing into this industry is to assess your objectives very carefully and reasonably. To do this by the book, you should ensure that your risk tolerance and capital allocation to Forex and trading are not excessive or lacking.
- In case you’re excessive, you should be aware that Forex is “punishing” for those who rush into it blinded by the dollar signs in their eyes. The most probable outcome of their actions would be losing everything right from the get-go.
- If risk tolerance and capital allocation are lacking, you need to acknowledge that risk-taking is a very important part of trading. If you cannot live with this, it’s probably better to step out or not start at all.
My Forex insight is to take your time to study and analyze your own financial goals in engaging trading. Here’s where motivations play a major role.
Good Before you get crazy here and start throwing loads of cash into a trading account. I need to tell you that, only a few people get rich trading retail forex, it is difficult, and you must be a master of trading and discipline to make a significant amount of money.motives vs bad motives – how to distinguish them? Source: TradingStrategyGuides.com
If you decide to start trading with bad motives (getting rich overnight, being famous or losing your 9-to-5 job), you’ll end up disappointed. All of the above reasons will only push you to take unnecessary risks, which will result in big losses.
Take note: trading, like many other activities, must be learned as well and should develop into a passion to be rewarding. It can get you nice profits, yes, but it requires your commitment and dedication.
No matter which type of goal you decide to choose, the goal should help you improve as a trader. The purpose of a goal is not only for you to achieve it; it should breed motivation, learning, and confidence. Source: Babypips.com
Forex Insight #2: Planning ahead: Get your basic Forex education
A lot of Forex rookies jump into action without even having the background knowledge of the markets.
It never ceases to amaze me how people risk their money in the market without having any idea what they’re doing. Then later, after they’ve lost a bunch of money, they decide it’s time to go to school. Isn’t it required to get your driver’s license before driving your car?
So what should you do to become a successful Forex trader?
If you want to be successful, you need to start building a solid foundation! Take your time to learn the basic Forex concepts, its jargons, and the main strategies!
Speaking from my own experience, the less you know, the more at risk you are. The important thing here is that there is no limit to how much you can know or risk.
There’s simply tons of information available on the internet and most of it is free of charge. You can study from the following:
educational videos on Forex exchange trading for starters
educational articles and tutorials on blogs
Forex trading seminars for beginners
Forex trading webinars.
Learning from a broker or from a mentor
I advise you not to rush your Forex educational process. It’s highly important to avoid getting overwhelmed by all the info you pour into your brain. You can try choosing one or two Forex brokers to learn from, but this is no easy task. I will explain in another article how to pick the right Forex broker for your needs.
It also might be useful to get a mentor, someone to learn from in small steps. Later, when you live trade you will find it natural to start with the things you fully understand and feel comfortable with.
The entire educational process is meant to work towards the most important goal: the shaping of your trading plan, which I consider it to be one of the most important Forex insights.
I like to think of a trading mentor as a football coach, not a school teacher. A mentor/coach shouldn’t be there to teach – it’s a guide. Unfortunately, a lot of so-called “trading mentors” get this wrong…
If the mentor is focused on supporting you for real, you’ll realize that spending $2k or even $8k is a real bargain because the ROI of a great mentor is huge. Of course, it won’t make sense if the so-called is only teaching what you can find online… Source: Desiretotrade.com
Forex Insight #3: The trading plan and its vital role
Your entire Forex learning process should help you achieve your ultimate goal: developing your own trading plan and helping you stick with it. There’s nothing worse than venturing into Forex blindfolded, with no direction or strategy.
Think about a trading plan like a business plan. Would you want to start a business without a proper business plan?! Probably not.
Going through the process of developing a plan will take the guesswork out of Forex trading since you simply need to follow your system when making trade decisions.
A trading plan defines what is supposed to be done, why, when, and how. It covers your trader personality, personal expectations, risk management rules, and trading system(s). Source: Babypips.com
What should a trading plan include in the first place?
Usually, a trading plan should include your profit goals, risk tolerance level, methodology and evaluation criteria.
Stick to your plan at all times!
Another thing you should keep in mind: just because you’ll hear about miraculous trading strategies, tips or tricks, do not change your plan! Dream sellers are just that: sellers of dreams. But more on this some other time.
Final words – The 3 golden Forex market insights you need to know before trading
In conclusion, I recommend to anyone who wants to venture into the Forex market to be very careful. Determining the goals, needs and motivations, and making sure they’re suited for this industry is really important and shouldn’t be skipped at any costs. Backing them up with a solid and steady learning process are the setting stones of a successful trader in the making.