There are two things you need to remember when you are thinking about starting Forex trading. The first thing is, Forex trading is not a shortcut to getting instant money. Secondly, high leverage can turn your profitable strategy into a losing one.
Everybody who comes to this market the main reason behind them is to earn more money as they think it is easy to do that here. Before I had started my trading career I spent almost 1 year to study and learn about trading and spent 6 months to back-test my trading strategy until I become confident in it.
I had invested $10,000 and though to earn $25,000 to $35,000 in a year so that I don’t need to work more. But in 3 weeks I have lost 30% of my trading balance. I didn’t found out what’s gone wrong and then I quit trading and manage a job as an assistant of a trader so that I can be around the trader and learn from their experiences.
After 2 years of working with him, I have identified my weaknesses and worked on them. Then I started to trade again and now I am happy with my trading career. I told this story so that you guys can understand trading is not an easy skill to consume and this article may help you to know certain things if you are thinking about trading in the Forex market.
Never consider Forex as a get rich quick opportunity
You will find lots of ads on the internet that will tell you that people are making $10,000 in $1 million through trading in Forex but trust me it is not so easy to do that.
There is a proverb that you need money to make money. Yes, people are making millions of money through Forex trading but the main difference between you and them is there account balance in much bigger than yours. There are lots of traders who are earning their livelihood through Forex trading because have gradually developed themselves and increase their trading balance to a level with what they can earn as a sustainable income.
Many traders are making 50% to 60% profit per year. Remember, they are risking more in their listed options. So if you want to earn from here you need to invest or wait till you have a sufficient amount so that you can earn your livelihood from this.
Leverage can be lead you lose your money
Leverage is a very helpful term in Forex trading but it has a dangerous drawback if you are not smart enough you may lose all your money in no time. Let’s say you had a coin then someone told you to flip it and for the head, you will get $2, and if tails then you get $1.
I know you will flip it because you have a 50% chance of winning $2. But if someone told you if the head comes then you will get triple of your net worth and if tails come then you lose everything.
I hope no one will agree to do to flip this coin in the normal main state though he has 50% chances to win. The second example is how few Forex traders think about how Forex trading works. As a result, they blow their account just in 1 or 2 trade because they go all in to check their luck and end up ruining it. This is how leverage can make your best trading strategy into a worst one.
Make a journal
Try to maintain a journal of your trades so that you can review them to find out your mistakes and laggings. Learning from your mistake is the best way to improve yourself. So maintain a journal and review it daily or weekly to determine your progress.
Learning about Forex is a never-ending process. We have just talked about a few things you need to follow when you start to trade. We hope you will benefit from these articles.