Four Steps to Successful Forex Trading For Beginners

Oma H. Barnett

It is everyone’s dream to work from home and become independently wealthy….or to not have to work at all. For many the allure of trading in the Forex Market seems very attractive and it might seem to be the answer to the question of “how to work from home.” I will tell you though that more people actually lose money investing in the Forex Market than win. This is a simple matter of economics….for every winner…for every dollar that you might gain, someone has lost a dollar. The money has to come from somewhere, right?

So you may ask, does anyone make any money at investing in the Forex Market and if they do, are they making a living doing this? The answer to that question is definitely “yes.” There are many small amateur investors that are able to make a good living trading on the Forex Market.

I know…your next question is “how do they do it?!” The answer is varied and runs anywhere from those that have come up through the ranks as traders to those who just seem to have a knack for numbers and reading charts and those amateurs who have put in the time to learn about the market, found a system that works for them and amassed their fortune. Simple enough, eh? Perhaps not, so let’s break it down….

Learning About the Forex Market – There are many resources out on the internet that will give you an overview of how the Forex Market works. For me to try to educate you properly in this article would be futile. Most Forex brokers also have resources to help educate you and are very helpful in that respect. They want you to be successful since they make money off of each trade that you make in the form of a “spread.”

Finding a Profitable System – Once you have the basics down and understand how the market works…how trades are placed, the hours that the market is open, which is 24 hours a day as the world turns (except for weekend and holidays) you are ready to try to find a “system” that makes sense to you and with which you can make profitable trades. This system can be a manual system with which you keep an eye on different indicators and execute trades once all criteria has been met according to your system. Your system might be based upon breaking news such as quarterly reports or other financial news that you might know is hitting the media and thus influences a certain currency pair. Your system might be a favorite Expert Advisor or “Forex Robot” that has proven profitable which runs off of a algorithm, much like the above referenced system where you watch different indicators….with an Expert Advisor or Forex Robot the software does all of this for you. That is “Expert Advisors” or “Forex Robots” in a nutshell.

Demo Account – Once you have a profitable system that works for you and makes sense to you I will suggest that you run it on a demo account or “paper trade” with it for a few months. Demo accounts are available through all of the major brokerages and this is a necessity for any new trader. There is no sense in wasting your seed money while you are still learning. Once you find that you are consistently making profitable trades without emotion and while using your trading system exclusively it will be time to move to a live account.

Live Account – This is where it gets interesting. It is one thing to paper trade but I will tell you that there is nothing quite like trading your own money. The most difficult part of live trading is to remain unemotional about your trading and sticking to your trading system. This is what separates the successful traders from those that wind up giving their money TO the successful traders and this is the most difficult part of trading…sticking with your system come hell or high water.

Now that you have a thousand foot view of what Forex Trading is all about I encourage you to educate yourself and jump in there with a demo account as soon as you feel comfortable. Trading in the Forex Market can be very exciting and, for some, very profitable. Just remember where all that money comes from and make a decision to become a smart trader who only trades with his system and don’t be one of the many who gives their money away to the few who make money in the market

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