This is our 6th video published on YouTube. Please make sure to watch the previous videos before watching this one.
So far, we have talked about the forex market, technical analysis and candlestick signals and patterns in our videos. In our 6th we have talked about the way that you have to plan to become a professional and successful forex trader. Knowing about the forex market and trading techniques in one thing and using what you know to trade and make money is another thing.
Here is the conversation we have in this video:
Making the decision is the first step. You really have to decide seriously whether you like to become a currency trader and make money in this business or not. You have to decide if this business is supposed to be a full time job for you in future, or you just want to try it and see how it works. Please note that if you don’t take it serious and you treat it like a hubby, the result will not be serious too.
If you really want to make money through currency trading, you should make a serious decision. This is not a computer game. It makes money. Therefore, if you really want to make money through currency trading, take it serious.
After making a serious decision, you have to learn about the currency market and currency trading. Maybe so far you have spent a lot of time and money to read several books, e-books, articles and DVDs, but still you are not profitable. Maybe the things you have learned can not help you make money, or even some of them cause you to lose money.
What do you have to learn exactly to become a currency trader?
You do not have to read too many books and articles to learn what the currency market is. The currency market is where the currencies are traded against each other.
It is where you can also buy and and sell the currencies against each other.
Regarding the currency pairs, they are just created for your convenience. As you have to pay a currency to buy another one, they are placed in pairs to make it easier. For example, EUR/USD is a currency pair.
When you buy EUR/USD, you buy Euro against USD. When you sell EUR/USD, you sell Euro against USD.
MetaTrader is the most famous and common trading platform. It is user-friendly and it has everything you need to analyze the price charts and find the trade setups.
Even if your broker does not support MetaTrader, you can use the MetaTrader of a different broker to analyze the price charts, and use your broker’s platform only when you want to take a position.
You have to learn about the price chart and the way it works. You should know the different kinds of the price charts and time frames.
You have to learn the technical analysis, no matter what trading system you will have in future. You should be able to locate the support and resistance lines and levels.
You should know the patterns like head and shoulders, triangle, double top and double bottoms. It is also recommended to learn the candlestick signals and patterns. It is a big help to know the psychology of the buyers and sellers.
While you learn the technical analysis, you should learn how to calculate your position size, and your position risk and reward ratio. You should also learn how to take the positions and set the stop loss and target orders.
Learning the above items will not take you more than a few or few days, or maximum a few weeks. After learning the above basic things, you should choose a trading system and start practicing it.
The best trading system is the simplest one. Do not choose complicated trading systems. They only make you lose. Basic and traditional technical analysis is the best trading system.
3. Demo Trading:
After passing the above stages, you have to open a demo account and start practicing your trading system with a demo account.
Your demo account size and leverage should be exactly the same as the live account you want to open in future. Do not open a $50,000 demo account if your live account is supposed to be a $1000 account.
Demo trade at least for 3 months (6 months is more recommended). If you have been positive on the first month, then open another demo account with the same size for the second month, and try to repeat what you have done on the first month.
If you succeeded to repeat your success for the second month, you should open another demo account with the same size for the third month. Follow the same system for the third month.
If you could repeat your success for 3 consecutive months on the demo account, then you are ready to go for live trading.
If you want to start real trading with more confidence, then you can demo trade for another 3 months. You should have already built your confidence with demo trading before opening a live account.
The key is that you should be able to repeat your success on the demo account. This means you are disciplined enough and you are able to control your emotions, and you have mastered your trading system.
4. Live Trading:
In case you have been able to be successful for 3 consecutive months on the demo account, you should open a live account with the same size as the demo accounts you have been using.
This live account is also like another demo account for you. Some traders are good in demo trading, but when they trade with real money, they can not control their emotions.
You should prove that you can trade with a live account exactly as you trade with a demo account. You should not behave and act differently when trading with a live account.
In the live trading, you should trade with the money that you can afford to lose, otherwise you will have a lot of fear that does not allow you to act properly.
Repeat your live trading success for 3 consecutive months. Prove to yourself that you can precisely follow your trading system without any problem.
You are a real trader when you can trust yourself and you feel the confidence in your heart. You can make money every month when you come to this point.
If so, then stick to your trading system, keep on making money, and do not allow anything to deviate you from your right track. When you make money with your trading system, do not try to make more money with the other systems. You will only lose money if you try to do that.