Getting Started in Forex

Have you succeeded trading forex by listening to other people's advice and the information you have found on the Internet? I am sure that the large majority of people who are reading this blog will say no (because it is a getting started in forex article). In this article I write about the alternative ways of starting to trade forex.

It behooves you to...

...at least try to spend time reading this article if you feel lost trying to find information on how to start trading forex. Here is why.

I love writing educational content because I enjoy writing about things that I have experience with. Sharing knowledge is one of the most rewarding things I have been doing in the recent years. The Internet allows me to build my fan base and get feedback from readers all over the world. It is with great pleasure I am posting my latest article. This article is about starting your education as a serious world-currency trader, the largest market in the world, otherwise known as forex, which is short for Foreign Currency Exchange.

I keep the conversational tone of this passage open and I try to avoid making any strong points or expressing my personal opinions about how trading should be, what to do, and what not to do. There is only one should-be type of advice I can give you. If you are intentioned to become successful at trading forex for a living, the one and only person you should listen to is yourself. The reason for this is that we, human beings, have different personality types and different ways of thinking about the erratic forex market and life in general. We create our own vision of the world we live in. And no matter who tells us what to do, we will always do things our way. Sometimes the other person is right, but it sure is better to learn the hard way by touching the hot stove yourself than to listen to someone else. It is so, because we do not trust that person. It is in your own style that I want you to become a successful trader.

I want you to see some of the alternative ways of thinking about forex and I will use metaphors to show you what I mean. I structure each sentence and each paragraph of this article strategically, with care, so that the important things will become clear to you as you continue to read. You will then make your own decisions based on the information presented to you.

What's your reason to start trading forex?

Before showing any interest in learning a skill, we usually have a reason that drives us to the point of doing physical or mental work to get there. We learn to drive our first car because we want to feel independent. Moreover, we learn the driving skill to be able to travel from point A to point B faster and spend less energy of our bodies. By the way, in forex, that is exactly the situation we want to be in. We want to stack up as many odds that work in our favor as possible before entering a trade.

The similarities between a beginner and an experienced forex trader.

There is a difference between a beginner and an experienced forex trader. But what the two have in common is that both still had to start somewhere. Did these people start in the same place? I have a doubt about that. It almost didn't matter exactly where they started. What matters the most is that over a period of time, they eventually learned the same things about the market - the truth. They then became successful traders, because they understood the rules of the market and leveraged that information to increase the odds of success. This is how people make it in the forex business.

It is difficult to start doing just about anything. People become good at doing something by repetition and practice. But before we go any further, let's try to answer the fundamental question: what does it mean to become good at something? Sometimes a trader may say: "I make a decent amount of money with forex, I am relatively good at trading". But what does it mean to be good at trading forex? And more importantly, how does one get there? To explain this, I have to use a metaphor.

In this context, the words good and comfortable are synonymous. To become good, or successful at something, means to become comfortable with what it is that you are doing. We do not feel comfortable driving a car if we don't spend several days or even weeks practicing driving. We need to know and understand the rules of the road. In addition, driving a car on an interstate road is a collaborative effort, in the same way that trading forex is. While the forex market is moved by the economies of entire countries, without the other people who may very well be professional investors, we would not be able to trade. When we trade forex, we are collaborating with other people, or even world-wide events.

Because driving is a collaborative act, we also need to understand how other drivers think so that we do not cause an accident. In order to succeed at becoming a good driver, you must become aware of what other drivers are doing on the road. In forex, also, to understand the movements of the market, we need to understand how people think when they trade.

Becoming a good forex trader is about being comfortable with the act of trading the currency market. If you have already traded forex whether with a demo, standard account or even on paper, you know that there are quite a few things to worry about. Things that could potentially cause a financial type of accident. An accident that would cost you the entire trading account, no matter what size.

Before we make any mistakes and thousands of dollars are lost, we must become comfortable with trading the foreign currency exchange market. But there is an important condition. Not only do we have to become comfortable with trading the currency market, we also have to become successful. We can only achieve that level of comfort if we have the patience to learn and understand the logic behind the market. No matter what anyone says about how unpredictable the market is, had there been no certain logic involved in the forex markets, absolutely nobody would be able to make money consistently. But people who make that happen do exist. It is the things those people know that we need to understand. The reason that they don't speak about how they make it is competition. It is difficult to understand the psychology behind that if you've never been there yourself before. But once you become extremely successful, you will, too, feel hesitant about telling others about exactly how you did it. It's a strange feeling. On the basic psychological level, once people become extremely successful, they also become fearful of giving advice to others unless there is a self-fulfilling reward in doing so.

Learning to be successful at forex is like learning to drive a car

But there is one slight difference between driving and trading forex. When we drive, we try to do exactly the same thing as the other drivers are doing if we want to avoid accidents. When we think about trading forex, to our surprise, it turns out to be the exact opposite. To become good at trading forex means to avoid what the majority of traders are doing. I explain this in the following paragraph.

This point is difficult to address because it may sound intellectually offensive to some of the readers. As a result, this point is purposely ignored. But I want you to really think about this. I promise I will give you something to fall back on. The reason I want to talk about it is that it is extremely important to know, if your intention is to make money with forex. Statistically, a large majority of forex traders are not successful. There are mediocre traders, thrill seekers (remember that we want to keep emotion out of this business if we want to make any money) and people who are not serious about trading, as well as hundreds of other groups. When I was working as a software engineer in San Francisco, I noticed that some of my coworkers had real-time charts open in some of the windows beside their IDEs at their computer desks. Working 10 hours a day at a start-up Internet company certainly does not give one enough time to trade any kind of markets successfully because of the extraordinary amount of focus required to do so. But many people who don't have the time or who are simply trying to get lucky and quickly cash in, still open trading accounts. This type of people belongs to the category that do not succeed at trading forex. We want to avoid doing what they are doing. Instead, we will learn the craft of trading in depth and become experts in the field of currency trading. How does that sound? Good? Good. Continue reading.

The purpose of my articles is to educate you about the common pitfalls of trading. We must accept responsibility for the seriousness of dealing with our emotions (obsessive behaviour, anxiety, being unsure, greed and fear). Many beginners try to think of trading in terms of greed and fear. More than often, they are the same people who, once these emotions are overcome, still wonder why they are not successful. The reason for this is because things are not that black and white, and there are hundreds of other factors that go into trading forex successfuly. We will learn these, one step at a time.

Even after saying that the majority of people lose money, I dont believe that you, personally, cannot make money with forex. I believe that just like anyone who can learn to drive a car, can learn to trade forex and make thousands of dollars with it consistently. But remember what I said earlier. Being successful at trading forex is about doing what the majority of people are not doing - it is like the opposite of driving a car on a highway.

We can trade the market and have winning trades as the losing ones, but that would make us run in circles, and result in hours of time wasted, uncomfortable emotions caused by lack of rewards and a depleted trading account. Unsuccessful trading feels unfulfilling. We want to avoid failure by stacking the odds in our favor. The odds are plentiful. Like in a game of roulette, most of the odds are against us. Especially if we have little experience. But unlike the game of roulette, we can decrease the odds by using our intellect. In order to reduce the odds of losing trades, we must first understand them.

What are the odds that work against all forex traders and how to decrease them?

When trading forex, our intention is never to completely illiminate the odds that work against us 100% of the time. That thinking is simply a fool's imagination because it doesn't add up. If we develop such unrealistic expectations from the market, we must be thinking about other things that make us not very successful. The goal is not to illimiate the odds of losing money, but to simply decrease them. If we want to be successful at trading forex, we better accept the following ways of thinking:

    1. We actually want to desire to have some of the losses. If we don't lose money at all, I would feel very suspicious, something would be going terribly wrong. I wouldn't imagine that a series of successful trades would last forever. Consider that highly improbable. For this reason we will not spend our energy on trying to achieve 100% winning under any circumstances.

    2. We must make more money than we lose. It's okay that we will always have losing trades, but only as long as the amount of money lost in those trades is lower than the amount we have made with the winning trades. This is the central idea behind risk management, a very important concept.

Of course, knowing what's going on in the market and what those odds are based on will help us become more comfortable with trading. There are no shortcuts. When you drive a car, do you drive across the lawn of your house because that makes the traveling distance to the drive way shorter? Perhaps it is, but that would ruin the lawn. In the same way, when trading forex, we avoid taking shortcuts so we don't ruin our trading account. The best news is that doing nothing at all, not entering a trading position in the market, reduces our chances of losing by 100%. This rule is very important. And sure as hell, we will take advantage of it to become successful traders. I will say this again. Not entering a trade will marginally reduce the odds of losing. And we want to implement this way of thinking every time we don't feel comfortable about entering a trade for one or more reasons. This is one of the top most effective strategies in your arsenal as a forex trader. We don't need to trade every hour of every day. If we feel that the current market conditions may pose a threat to making a rational decision, we will not place a trade at that time, decreasing the odds of failure by 100%.