10 Important Steps to Learning to Become a Forex Trader
With high volatility, the forex market will become a dangerous and risky battlefield if you are determined to jump directly into it without knowing the full details of forex trading in detail. Instead of wanting to make a fortune from forex trading, you can be a market cruelty because of your ignorance of how to trade forex ? Here are 10 important steps in learning forex so that you become a real forex trader:
1. Know forex trading / forex.
The forex or forex market is a type of trading that trades the currency of a country with another country’s currency. Transactions in forex trading involve the forex market throughout the world for 24 hours non-stop and 5 days a week.
Forex trading every day is always spinning, starting from the New Zealand and Australian markets which are open from 05.00 WIB to 14.00 WIB. Continued to the Asian region which includes the markets of Japan, Singapore and Hong Kong which are open from 07.00 WIB to 16.00 WIB. Continuing European markets, namely Germany and England, which are open from 13.00 WIB until 22.00 WIB. Then the American market ends which starts at 20.30 WIB to 10.30 WIB the next day.
Knowing this trading hour is quite important, you know because of how you will trade if you don’t know the schedule, right? There is something interesting about the schedule of forex trading hours, some forex traders suggest doing transactions at certain hours, for example only making transactions after European trading hours open because of higher volatility.
2. Learn forex trading using a demo account.
In a forex demo account, you can learn a lot about how to trade forex. You can learn how to open buy / sell positions, learn to use forex indicators to do trading analysis. So, by using a demo account, you not only learn to know the forex market directly but can also learn how to become a real forex trader before you will go directly into the market.
Then the question that arises is how long do you have to learn forex using a demo account? Of course, until you understand very well how to trade forex . Some say, it takes at least 3 to 6 months to be ready to jump directly into the forex market using real money. The most important thing is that with a demo account it is expected that you train yourself to be better at managing transactions, from how to use trading indicators to learn to analyze technically and fundamentally, apply good money management, to manage your trading psychology. After you are sure you have mastered it, this means you are ready to move to the next stage.
3. Choose a broker / brokerage company.
Choosing a broker or broker cannot be arbitrary. You must choose a good and bonafit broker, you also need to find out the facilities offered. Example; deposit, withdrawal, prevailing spreads, leverage margins offered and what is also important is whether they provide a demo account as a trading simulation. In addition, their trading platform must also suit your needs, such as the availability of charts / graphs as your facility for analyzing and the platform you need to understand easily.
4. Recognize the movements of the currencies to be traded.
You need to know the characteristics of a pair or currency pair. Because each pair has different characteristics, for example EUR / USD and GBP / USD pair, both have different characteristics. Both in terms of volatility and in terms of transactions. Recognizing this currency pair can make it easier for you to determine which pair is convenient for you to trade so that you are more focused on getting profit.
5. Search for information and read market conditions.
In forex trading , you cannot just focus on the chart on the monitor screen. But you also have to know all the information related to the money market. Because there are some economic news that can affect currency movements. For that reason, before opening a position, you should seek information in advance whether there are fundamental news that will be released and allegedly able to move the market. So that later you will not make the wrong transaction. You also have to be able to read the market situation, whether the trend is bearish, is bullish or even experiencing sideways. Do not let you fight the trend as often emphasized by professional forex traders with the term “follow the trend” and make the trend as your best friend. This means here, do not try to take short positions while uptrend and take long positions when downtrend. Unless you have large capital so that it can affect market movements significantly.
6. Measure the strength of the capital you have.
You must know how much your capital strengths. Don’t just be desperate! You must calculate the amount of the profit and loss. You must learn how to determine stop loss and profit targets. The success of your money management is one of the keys to the success of being a reliable forex trader.As a trader, of course you want profit and avoid losses as much as possible, right? Be careful with the leverage given by the broker. Don’t because you want to make a big profit by using leverage, you go straight to the edge. There have been many articles in this blog that discuss the benefits of using leverage. Leverage is like a double-edged sword, leverage can bring many benefits, but it can also bring multiple losses.
7. Look for a trading system that matches your character.
Determine the method or trading system that matches your character. Like for example the selection of the right time frame for trading. Do you use a 5-15 minute, hourly, daily or weekly time frame to determine open positions. Because each TF has a different level of risk. If you are a scalper who usually uses TF 5-15 minutes to do scalping, will face higher price volatility and the risk is certainly higher than a day trader who utilizes daily TF.
You are looking for a trading system that suits your personality. Do not force yourself to always trade at any time when you are unable to cope with the pressure due to volatile price movements. The important thing is not the quantity of trading, but the quality of your trading. What does it mean to open positions often but the results are often loss? Isn’t it better for you to do quality trading even though the trading quantity is small, of course the amount of profit will be more, right?
8. Manage trading psychology.
Mastering trading psychology is an absolute thing for a forex trader. Many traders fail because they don’t master their own psychology. With high volatility, the forex market will certainly put emotional pressure on traders. It is not surprising when opening the wrong position and loss, many are affected and in the next position is open not based on analysis but because emotions want to cover losses experienced previously. For this reason, it is very important to regulate your emotional rhythm by learning forex trading psychology .
9. Build a trading plan.
Like people trading, of course you must have a trading plan or trading plan. Surely all traders want to make a profit. But if you can’t manage your own trading plan, how can you get the benefits? One that you have to compile is to determine the stop loss and profit targets in each transaction.Don’t be greedy and too arrogant. Determining stop loss means that you will limit the losses that you may experience. By setting profit targets, you will also avoid the possibility of losing profits that are already in hand. Suppose you set a profit target of 20 pips, after TP is reached, of course you are safe and can focus on the next trading, imagine if you did not install TP and suddenly the market movement reversed direction, whereas you had already profit a few pips which was actually quite good. Surely regret will come right?
Not only limited to stop loss and profit targets only, the trading plan must include self management when you trade and when you do not have to trade. More clearly you can read article 5 of the guide in learning to build Forex trading plans .
10. Trading discipline.
After you determine the trading system, do psychological management and make a trading plan, then you only need to do it repeatedly. Write down everything that you think is good and supportive to bring in profits and fix the less. This way, later you will get used to it and will automatically know when you have to trade and when you have to get out of the market. Discipline is one of the keys to successful forex trading. And with discipline, a trader will do quality forex trading according to his character.
The ten steps above are important steps that you must do in the process of learning forex . With these 10 stages it is expected that you will become a forex trader who can take advantage of the volatile currency market situation to get profit. Every step you can certainly do as long as you have the desire to learn. Being a forex trader is easy, anyone can. But being a successful trader and making lots of profits is a bit difficult. For that you need to learn a lot more about forex . Hopefully this article is useful