How to Become a Successful Forex Trader [Video]

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:

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1. Decision:

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.

2. Learning:

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.

That’s all.

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.

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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.

Here is the video:

Published by

LuckScout Team

"Whether you think you can, or you think you cannot, you are right." - Henry Ford

20 comments:

  1. Thank you. I think practising is very important here. Patterns can look different on model situation and in the live market. Sometimes it can be challenging to find strong setups, as we are trying to trade a lot to make money and don’t want to miss the strong trades. Then we can easily pick up the poor setups and realize after it went opposite.

  2. Please, you tried to talk about brakeven in stop loss. I must say that this is the ultimate reason I have been losing in my trading experience. Now how can one set the stop loss in such a way that you lose in pips instead of losing in large numbers. I will be grateful If your answer will be mailed to me. Thanks in anticipation.

  3. Hi
    One of the things that took me a long time to realise (I hope I am right) is that when I trade a pair say EURUSD – and I buy – it means that the Broker actually lends me the Euro with which to buy the USD – and when I close this trade – I sell the USD value to buy back the Euro and hence balance out the original loan (short position in Euro). This will leave a -ve or +ve (being a trade success or failure) position in USD in the account. Some Brokers exchange this immediately back to the account base currency without disclosure – others keep the balances in the currency that was traded (USD in example), until one manually makes the exchange back to base currency themselves. If unawares, this can be a real trap – I had an account wiped out because of this. I guess this is where SWAP fits in as well, assuming the trade is more than one day.
    Is it possible to write and article around this issue? How to deal with it properly?

    1. This is what market maker brokers do. Indeed the old fashion market maker brokers. You will never see this with true ECN/STP. The base currency is USD. Whatever your account balance is, when you want to buy a currency against another one, first it has to be converted to USD and then buys the currency with USD. This is all done automatically in global currency market.

    2. Hi

      The problem I have with my question above and your following answer is that the Broker I was talking about was Interactive Brokers. Youness (I think) has advised that Interactive Brokers is a true ECN STP. Interactive Brokers has the system of keeping proceeds in the quote currencies until close out back to the account base currency (which requires another commission to be paid). So I do not know what to think now? Is it possible to clarify the point?

    3. Hi Peter,

      Sorry if I misunderstood your point.

      I have not worked with Interactive Brokers. However, I have never seen such a weird process with the other ECN/STP brokers. If they are really a true ECN/STP and there is nothing strange behind the scene, then they do this to make more commissions only, because it doesn’t have any technical reasons.

    4. Hi
      It certainly confuses things, because from the moment a trade is closed – the balance in the non-base currency immediately becomes a defacto trade with the account base currency. Each day any negative result due to a change in the quoted rate (for the day) is taken out of the account.
      Thanks for your reply

    5. Peter,

      I remembered many years ago I signed up for an account with a broker that looked too strong. They were used to do the same. Then I found out they were market maker. Your broker can be an ECN/STP because they route your orders to LPs. But on the other hand they make money through your account balance when the rate changes (this has nothing to do with LPs). Do they also pay you if the rate goes against them?

    6. Hi

      They say that they add money to the account when the rate has a positive influence to the account (and I have observed cases of this happening). However it seems that there is never much added compared to the amounts withdrawn – even when the amount of currency movement has been significant. They also charge & withdraw interest on any negative balance amount but do not pay interest on any positive balance amount.

      So
      . the proceeds of trading is held in REAL account positions, negative or positive.
      . the amounts of non base currency are held as a constant figure (unless changed by more trading wins/losses).
      . these balances are RECALCULATED DAILY in accordance with the current exchange rate with the base account currency. This calculation results in an UNREALISED Translation gain or loss. This gain or loss is transferred to the real base currency account in an addition or subtraction.
      . negative balances in any of the currencies are charged with interest (it is considered a loan)- this interest is charged to the base account daily.
      . if the balances are positive – no interest is added or paid.

      . to stop influence of non base currencies on the base account, one must close the non base currency position – and pay a commission – because it is made as a trade in the opposite direction by the platform and must be executed.

      On reading the FORUM comments and statements concerning Brokers ECN/STP & MM – it seems that all Brokers are either MM outright or both MM & ECN – there are no pure ECN/STP brokers – that we can access with small accounts.

      Learning the Brokers is more difficult than learning the trading system. In the case of IB it seems that when “on-line” they are ESN/STP (for lots > 1)- but “off-line” they are MM. (I change MM meaning from Market Maker to Money Manipulator)

    7. Hi Peter,

      Sorry to hear that.

      I agree that now most brokers have both MM and ECN/STP systems. Still there are some brokers that act better than what you explained.

  4. The wisdom of a real trader, very good advice a good step by step approach to help the too hurry, of us, rather than rushing us into the crowd. Thank you.

  5. To become a successful trader

    • You need to define your goals and then choose a style of trading that is compatible with those goals.
    • You need to choose a broker whom you feel comfortable but also one who offers a trading platform that is appropriate for your style of trading.
    • You need to choose a right methodology and then be consistent in its application.
    • You need to choose a longer time frame for direction analysis and a shorter time frame to time entry or exit.
    • Calculate your expectancy
    • You need to focus on your trades and learn to love small losses.
    • You need to build positive feedback loops
    • You need to perform weekend analysis

    For any other help related to see:http://www.softwaredownloadcentre.com/software/strategy-quant-professional.php

  6. Hi,
    What’s the purpose of a new demo account every month during the demo period? Why not just trade the same demo account over that period?

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