- 1 Make a choice and stick to it
- 2 Where should I get my information?
- 3 Trade virtual accounts
- 4 Important! Use backtesting softwares
- 5 Start with a small live account
- 6 The best people to learn Forex trading from
- 7 What to avoid
- 8 To summarize
In this post I will cover the best ways in which you should learn Forex trading if you are a beginner. Because the world of online trading is so huge, the learning curve involved can be equally as huge. You can also easily get pulled in a lot of different directions with no real direction. Hopefully after reading this post, you will be able to shortcut your learning curve by more than half.
Make a choice and stick to it
There are so many different instruments you can use for trading in the online world. From ETF’s to Options to CFD’s. Stocks, Bonds, Forex, Oil, the list can go on. One very important factor is for you not to be a jack of all trades, but to become a master of one.
All these different markets behave in different ways and depending on the instruments you use to trade them, your strategies will vary. I am not suggesting not to blindly pick one and never look at any of the others. But once you have found something you are comfortable with, stick to it and master it. Only then will you start to make real money from the markets.
If your choice is to learn Forex, then pick an instrument and try not to monitor too many different currency pairs at first. I would advise sticking the most liquid, most popular few and just watch how they move and react to events.
Where should I get my information?
There are various relatively reliable sources of information available. I have listed some of them below.
books from amazon
The first place I ever looked when I started getting in to trading was Amazon. For me having a paper copy of a book to flick through and read at my perusal makes the information so much easier to digest than staring at a screen trying to digest 50,000 words of an e-book. But that might just be a personal preference.
If you get books from reputable publishing houses, the information is usually quite reliable. Amazon is a great place to get yourself a strong foundational knowledge of Forex markets and how they work.
One of the best books I ever read was The Way of The Turtle by Curtis M Faith. I have done a review of Way of The Turtle here if you are interested in hearing more about the book. I found it give some really good information on trading, but also kept me encapsulated with a great story line.
Visit forex Forums
Once you are immersed in the world of Forex and you have a good base knowledge, forums are a great place to visit to find out how other people are trading Forex and how they are doing it successfully. Forums are a great place to ask questions and get good advise from the professionals.
A lot of the time traders will share some of their strategies for others to take and use. Some Forex traders active in the community are also very open to giving advise to newbies. Try to be active in the discussions and be a part of the community and you will find that you can learn a hell of a lot of free information.
On thing to be wary of when visiting forums is that you may have to filter through a lot of garbage to find the hidden gems. In some less regulated Forums you might find that you get bombarded with sales spiel and people will use the questions you post as a means to try and sell you something that you probably don’t need.
Here are a couple of the best Forex forums that I have had the pleasure of being a member of;
Aside from the having a massive community one of Forex Factory’s key features is that it comes with an awesome economic calendar which lets you know about events and how they might affect the various currency pairs.
I am listing this one, not because it comes with cool features like Forex Factory, but because I have had some real quality feedback to my questions on the Trade2Win forum. The community on here is very active, I have started threads which ended up with hundreds of people following and giving good feedback. An all round very supportive Forex community.
Again, besides their community Baby Pips comes with its own cool features. One of them being a Forex course called “School of Pipsology” which is a free course that takes you from absolute beginner level right through to advanced and includes some nice trading systems.
Trade virtual accounts
Every broker offers a demo or virtual account of some sort, with some virtual money to go along with it. Although I don’t agree that this is the best way to practice Forex strategies (I will tell you what is later in this post) I do think that it is the best way to getting used to using the platform that you will be trading on. Broker like FX Pro offer demo accounts and they also offer some free trading signals for you to test at the same time.
If you jump straight in to a live account on a platform you are unfamiliar with, big mistakes can be made which can cost you. Different brokers have different platforms so even if you have used one before, the broker you are using now might have a different set up.
Important! Use backtesting softwares
I did promise that I would tell you the best way to practice your Forex strategies and here it is. Using a backtesting software is an absolute must if you want to shave time off your learning curve. My personal favorite is Forex Tester 3 which I have reviewed here. This allows you to test your strategies over 16 years worth of data before even thinking about trading them on live markets. As I mentioned, you will have to filter through a lot of garbage to find the hidden gems. Think of backtesting as being your filter to finding the gems.
Also watching how the markets move and being able to speed it up and slow it down across time frames really gives you a feel for how markets move, allowing you to be able to come up with your own trading ideas and strategies.
I would rank this point as the best thing you could do learn Forex trading and become successful at it.
Start with a small live account
Even if you have done all you homework and backtested all your strategies I would still suggest starting off with a small trading account in order to help you learn. Put a small amount of money in there and write it off in your mind. Think of it as tuition fee’s for your education. Test some of your trading strategies with this money and gauge how it makes you feel. One of the biggest killers of trading accounts is poor money management due to an undisciplined trading psychology. The gambling mentally can very easily take over when trading with real money and you may have to ask yourself the question “is Forex trading really for me?”
You must use a small trading account in an effort to learn to master your own psychology when it comes to trading.
The best people to learn Forex trading from
It may seem a bit obvious, but the best people to learn Forex trading from are the people who are actually doing it. You can find some of them as reputable members on forums. Do your best to pick their brains when you can. If you’re involved enough in that community you will get answers.
This leads me in to my next point. Learning from books by real life traders is also a great tip. I mentioned before about Curtis M Faith who is a practicing expert in the field. There are many more. Books like Stock Market Wizards and The New Market Wizards by Jack D Schwager gives you 1st hand knowledge from the people who have made a real success from Forex trading.
What to avoid
One of the downsides to trying to learn Forex trading is that there are so many scams and so much bad information out there that you really have to be careful who you learn from and know what to avoid. Below are some examples of what you should be avoiding;
Too good to be true sales pitches and guaranteed earnings
If you have visited more than a few Forex website you would have seen this. Usually in the form of automated Forex systems that earn you thousands of dollars a day on autopilot. Or guaranteed turn $50 into $50,000 in just 12 days. Please do not waste your money on these kinds of systems, no matter how convincing the sales pitch is. If these people really had really found a way of cracking the market for millions, they would not be pitching it to you for a measly $200. Forex trading is hard, it takes hours of work, dedication and patience. The below video is a great example of what to avoid.
What a load of garbage!
Forex trading is HARD to learn. But, if you’re willing to put in some serious dedication and hard work, Forex trading can be a very lucrative career for you to enter. It simply does not work if you can only commit part time. You need to be committed and able able to filter through the mountains of garbage that will be thrown your way.