The coolest thing about running this website is the amount of legitimate money making avenues I have been introduced to over the years. Sure, a majority of what I cover here usually comes with a scam warning, but there have been many ‘gems’ unearthed along the way.
I was first introduced to Forex several years ago…and I had no real idea what it was about!
At the time I was reviewing a Forex indicator (or system) that turned out to be a complete crock of sh#t, and that kinda put me off the whole subject…for a while at least.
But Forex products kept on following me around, and before I knew it I was reviewing a handful every month. I HAD to find out what all the fuss was about and I HAD to find out the truth behind trading currencies.
Now, this article is strictly for newbies looking for information on how to trade Forex for a living. It’s designed to be a very first step for newcomers to the subject.
During my time trading, I’ve met a lot of clever people…but at the end of the day it doesn’t matter how clever you are…the currency markets will eat you up alive.
I’ve witnessed great traders blow their accounts within a week – some are overconfident, some have more money than sense and some are just plain unlucky.
Trading is an awesome way to earn money online BUT it is not something you can just slip into – if you want to learn how to trade…you are going to lose money doing so!
This article is designed to help newbies keep that loss down to a minimum – trading is NOT a game…
And more importantly – trading is NOT gambling…
If you are interested in making real money online that can possibly replace or supplement your income regularly check out our #1 Recommendation HERE
Forex Trading Money Management
Okay, I know how exciting it is to first open an account with a broker AND I know how eager you are to start making trades…please don’t jump into anything before reading this first section (PLEASE!!!!).
The most important rule for any trader, be it Forex, Stocks or Futures trading….is to SURVIVE.
That sounds a little bit frightening doesn’t it?
Good – it was supposed to!
You see, your money is your ammunition – all traders have losing trades, but when you blow your account you can put yourself in a position where you can no longer have winning trades.
This means you are out of the game – period.
Most newcomers to the Forex market tend to concentrate on developing a profitable strategy – which is great!
But you have to combine this strategy with using solid money management and having a rational, disciplined trading attitude.
When I first started out trading I was using tiny lots every time I entered a trade. You may laugh but, I was aiming to make $1 and my risk was no more than $0.30.
Seriously – that’s how I built my account up!
Trading with practice accounts is fine, but at the end of the day you KNOW there is no risk involved…so you make trades you wouldn’t normally make in the ‘real world’ (or on the real markets).
It doesn’t matter how small the amount of money invested in a trade – ALWAYS try and practice with real money.
It may sound stupid, but eventually you will get really pissed off when you get to the end of the day and find out you are $3 down – this is GOOD, this is WHAT YOU WANT TO FEEL.
You see, these types of feelings help you realise how important solid money management is. You may only be losing a tiny amount of money…but you are experiencing that losing feeling.
What is a Stop Loss?
A very good question – one EVERY newbie trader needs to ask at the end of the day!
The stop loss is perhaps the most powerful weapon in your arsenal as a Forex trader – think about the top poker players knowing when to ‘fold’ a bad hand.
The stop loss gives you the power to predetermine your risk to the exact penny – you know how much you are going to lose if the trade goes off the tracks.
If you are trading without a stop loss you are essentially ignoring the fact that you could be wrong – this is not the mindset you want if you are looking at trading for a career.
By setting a stop loss you are letting the concept of failure into your trades – this is also a vital part of your money management (see the last section above).
A stop loss is also a great way of letting yourself know that a trade is over. We are all emotional beings at the end of the day and this can lead us into make poor decisions. I’ve lost count of the amount of times I’ve witnessed traders staying in a trade because they believe ‘it’s definitely going to turn around soon’.
These types of traders basically talk themselves into a trade that is going (or has already gone) bad.
A stop loss is a rational decision you have made BEFORE you enter a trade. Therefore it is a rational exit point for you during the trade!
There are many great publications on Forex trading and there are also millions of courses online…but interacting with other, more experienced traders, tops them all!
There’s no point being embarrassed about being a new trader – the only fool in the classroom is the person that doesn’t raise his/her hand every time they are stuck with something.
Take some time to research the numerous Forex communities online and find a place you can start asking questions. An important fact to remember is that we all started out as beginners at some point – some traders will be arrogant asses but the majority of traders will lend a friendly hand (a good, solid opinion can go a long way!).
It’s An Emotional Game
As I touched on above, by nature, we are all emotional creatures…but emotions can completely destroy a trader’s career. The Forex market is exciting, fun and dynamic…but it is not a game that should be ruled by emotions.
99% of the successful traders I have met have one thing in common – they treat their trading accounts as a business, not a fun hobby.
Every time you use your capital to make a trade you are effectively making a business decision. Some of these decisions will work out and make you good money…whilst others will backfire on you and cost you money. This is the nature of the game.
As soon as you lose sight of your rationality, and emotions come into play, your losses will become more frequent and MUCH more costly.
There will always be moments where your emotions ‘tell’ you to adjust your stop loss slightly mid-trade, where you jump the gun on a trade and enter way too early (or way too late!).
Then there’s the anger – oh, how I used to know the anger side of things so well!
Suddenly, without warning, you lose 5 trades in a row and the anger takes over. This results in you taking twice the risk you normally would to try and make up for the lost balance…and you slip deeper into loss…
This type of anger can quite easily wipe out a month’s worth of profit you have built up – it’s an expensive lesson to learn.
How to Trade Forex For a Living
It’s easy to feel overwhelmed with information and trading strategies as a beginning trader, it happens to all of us in the beginning.
As I mentioned above, interaction with other traders can really help your own trading journey. If you are looking for a friendly setup to start out trading with I strongly suggest using the Etoro platform.
It’s a cross between a broker and a social network for newbie traders (in stocks, Forex and Futures) – you can even copy the top trader’s moves in the market.
If you have any questions relating to the subject of Forex trading, please make use to the comment section below (and I’ll get back to you asap).