2010 is finally behind us, and hopefully with it the recurring volatility and ever-present bouts of uncertainty we have become accustomed to in the financial world have faded as well. Due to flighty returns, many investors spent much of the year biding their lackluster results while investigating a host of alternative investment vehicles. Many beginners were drawn to currency, or forex, trading as an interesting investment regimen. Unfortunately for them, though, many of these newcomers did not fully understand the inherent risks of forex trading, and soon departed the scene, frustrated and disappointed.
- Prepare: You must take the time to learn everything you can about forex trading. This includes reading books, forex news articles and other website content on the topic. The goal here is to establish a level of familiarity so that when you take a formal instructional class, the material will not seem foreign – and your ability to absorb and assimilate it will be enhanced.
- Learn: You will want to enroll in a structured class, hopefully locally if one presents itself. The only way to shorten your need for experience is to locate a professional mentor that will guide your efforts and be available to you for discussions and guidance. There is a way to succeed at forex trading. Finding an expert is much easier and less costly than “trial by error.”
- Experience: Your mentor will help you choose an online forex broker. This broker will provide you with “virtual” cash to use with real-time quotes on their free demo system. Experts invest hours in these practice sessions to perfect their detailed trading plan strategies, as well as achieve the level of consistency they know they need when trading with real money. No shortcuts allowed.
- Control Emotions: In case you missed it, you must have a detailed trading plan to guide your effort before, during, and after you open and close a position. Decisions must follow a stepwise process, or risk emotional intervention. Your emotions will undo your best effort if not blocked by a preplanned decision making process, practiced to the point of habit. This plan must also contain risk management techniques to protect your downside from adverse movements in the market.