If you’ve been thinking about trading on the foreign exchange (forex) market, but you haven’t taken the first step, then this article is for you. It explains the journey from newbie to confident trader, and how you might develop new skills and—hopefully—mastery. It will also help you save time and money by showing you how to avoid some of the novice mistakes that many of us have made. Most of all, this article will show you exactly why some people love trading forex, what they get from it, and what drives them.
An introduction to trading forex
Trading forex is one of those things people have heard about, but rarely consider doing. This is usually because of fear. Perhaps worry would be a better word. We all get a little uncomfortable when we start something new and unfamiliar, but those things that make a measurable difference to our lives tend to have a demanding learning curve. That’s the case with trading forex.
The concept of trading is relatively simple. Buy currency contracts (CFDs) when the price is low, then sell them back when the price is higher. Brokers make a modest spread for providing access to the forex market and their services, and the clients trade from home using a provided trading platform. That’s trading forex in a nutshell.
Targeting currencies to trade, and choosing whether to ‘Buy’ or ‘Sell’ is another thing entirely, and is covered here. But this article is not about money. It’s about knowing whether trading is right for you. Below is an uncomplicated account of my experiences when I first started trading forex. It’s a very common story. I hope you find it helpful.
My first week trading forex
Opening a trading account with Exness is easier than ever, and it doesn’t really take long either. You might say it’s no more complicated than signing up with Amazon. Once my account was approved and ready to set real orders on the forex market, I did the smart thing. I opened the demo account and got to know the trading platform. I’m pretty good with software, so I was confident that I could figure it out. That was my first mistake.
There are dozens of tutorials and blogs showing you how to use a trading platform. Spend as little as one hour on YouTube and you’ll soon be familiar with all the basics. I remember the first time I saw a trading platform. It was scary, learning was slow, and I considered giving it up more than once. I found video tutorials and followed the step-by-step guides. By the end of the first week I was telling a different story.
I was setting risk-free orders on the demo account and watching the price fluctuate with a naïve expectation that profits were about to start rolling in. The problem was that I was setting my trades based on price history and my gut feeling. This is basically gambling, and that’s not what successful traders do.
My second week trading forex
I took the big step and moved to a real account. My demo account was in profit and I was feeling confident. How naive I was back then. I’d heard about fundamental analysis and started reading the news reports daily. Bad news for the US means bad news for USD, right? Not always, but I was starting to recognize the cause and effect, and my trading performance was improving.
Pending orders came next. These are automatic actions that will close trades when I hit a certain profit level, or close orders to stop my losses if the market goes the wrong way. Again, my performance improved.
Then came technical indicators. Drawing lines and clouds over price charts to anticipate the coming market shifts became my daily goal. I had mixed results and wondered if there was any value in it. One day, I combined my technical assumptions with fundamental analysis, and I started to realize that trading is much more than just a hobby. To trade like a pro, you have to live and breathe finance. So I got busy reading ebooks and watching every tutorial I could find.
My first month trading forex
I made a few sacrifices, cut out other activities, and somehow managed to make time to study forex every day. I know now that it was the smartest thing I could have done. While studying and exploring, I discovered the compound effect. The idea is to start trading small, then raise your investment budget only when your account balance rises. If I suffered losses, I lowered my budget. Whenever my balance increased, I increased my order sizes. This is often called money management, and new traders not using it have a higher risk of failure in the first year.
So why do traders love trading?
We all work, rest, and play, but the only period that offers flexibility is your “play” time. What do you like to do? Watch TV, play video games, surf the net, or post on social media? There are lots of options these days, but not all of them give lasting value. For example, spending hours developing gaming skills gives nothing in return, other than entertainment or escape.
Trading is also very exciting, and the thrill of a winning trade far surpasses the thrill of winning a digital race or battle. But it’s much more than that. Trading requires structure. It flexes the analytic muscles of your brain and makes you sharp. It’s solving a puzzle or mystery and decoding signs that could indicate a coming price move. It’s challenging, interesting, even rewarding, and best of all you can do it whenever you feel like it.
Moreover, trading forex isn’t a one-way street. Money goes in, but it also comes out. Yes, there are people who make a career trading forex full-time, but I would only recommend that if you love doing it. As a trader, you don’t have colleagues or a boss, so it can be a lonely life. I love it, and my day goes by fast when I’m immersed in the currency market.
Should you try trading?
Trading forex is not for everyone, but the only way to find out if it’s right for you is to try. Start with the risk-free demo account as I did. Don’t let your profits or losses be the deciding factor as to whether to continue or stop trading. You’re still a newbie and there’s lots to learn that can enhance your trading performance.
The most important thing is that you enjoy the challenge of trading forex. If you feel the excitement of placing trades and love digging around the web for trading insights that you can act on, then trading could one day be more than just an entertaining hobby. I definitely recommend starting with a modest budget. There is potential for profits, but there is always the risk of loss, so set a trading budget from the start and stick to it. Have fun and build your portfolio without urgency. As your skills and account balance grow, so can your order sizes and profit goals.
Join the thousands already trading forex CFDs from home
Not sure how to get started? No problem. Follow this step-by-step guide.