This is the beginners’ guide to forex trading. If you’re reading this, I can assume one of two things. Either, you’re a beginner forex trader, you know someone who is, or you’ve been in the game for about a year or more and are looking for forex education to improve your chances of success.
Before I learned about trading currency, I was facinated about the stock marketing, how IRA and different mutual funds worked… the idea of being able to think about what’s going to happen next and receive money for it seemed easy!
The only problem was I didn’t have tens of thousands to invest and didn’t want to wait until I was 65 to cash in on a “payday”.
The fact was that I was in my mid-thirties, trying to find away to trade for a living without going deeper into debt.
It wasn’t long after that I was reading about forex trading and was captivated by its complexity yet thrilled by its flexibility.
I soon became overwhelmed by the volume of trading coaches, courses and programs available to beginner forex traders.
Which one do I choose? Which method is right for me? Which forex trading platform should I use?
All of these questions spiraled in my head, not knowing any forex traders personally I began to lurk in chatrooms and on forums… my questions still weren’t answered.
It was at that moment when I vowed to create a beginners guide to trading forex. No trader should feel overwhelmed, frustrated or confused the way that I did.
Whether you’re brand new to forex trading or not, I welcome you! You’re in the right place to meet passionate educators who enjoy seeing you succeed in life and at trading forex.
Our goal here at Forex-Consulting.com is to transform new forex traders into financially confident experts who trade for a living.
We want every beginner forex trader to feel confident in their ability to wake up in the morning fully prepared to trade for the day. Does that sound like something you’d want for yourself?
Great! Let’s begin.
Beginners Education In Forex Trading
Creating a beginners education in forex trading wasn’t easy. There’s a lot to learn and it can be confusing based on the currency pairs you choose.
After spending hours staring at charts we’ve found a way to provide a straight forward approach to teaching you how to master forex trading.
First, let’s review the purpose of the foreign exchange market.
The reason why the forex market exists is to help quantify the value of a country’s currency against another. It then allows us, banks and other institutions an opportunity to transfer, or exchange, one currency for another.
Say you live in the United States and want to travel to France, like my wife and I did this year.
Once you get to the airport you search for a currency exchange kiosk to trade your dollars into Euros. You explain to the clerk that you’re heading to France and she hands you a sheet of exchange rates.
These rates represent how much each dollar is worth against the Euro. If one dollar is worth more than one Euro, say for every $1.00 you receive 1.50 in Euros, you’re getting, $0.50 more for each U.S. dollar you exchange.
That’s great, right?! Of course it also works in the reverse.
We trade forex in order to receive money when there’s a significant difference in perceived value between two countries’ currency.
Choosing A Forex Trading System
There I was sitting in front of the EUR/USD pair, my fav, for the very first time. I was so confused. Did the bullish trend mean the EUR was stronger against USD? Should I use the 5 min chart or the 4 hour? Did it matter which day I traded? Why was the market open on Sunday?
Those were the questions I was asking myself. Can you relate?
So, how do you choose a forex trading system? Once I understood the meaning of the charts, I dialed in my trading times, and began my journey to adopt a trading system that worked for me.
I pulled information from several traders, books and tested what worked for me and what didn’t.
If you’re like me, a bit impatient, and you want to go from zero to 100 fast… determination is required… I spent many sleepless nights (not recommended) studying a forex pairs.
Choosing a forex system that works is a scientific art form. The art form comes in understanding what the banks and large speculators are doing.
The question you want to ask yourself, regularly is “where is the money going?” Put that at the top of your trading system.
Day Trading Forex Training
Day trading forex comes down do understanding the temperament of your forex pairs and the current financial landscape.
When there’s clarity on how many pips a pair moves per day and you’ve checked your source, forex factory, for high impact news, you’ll have a better idea of where your trade is likely to go.
Here are the steps we’d take for day trading forex:
- Look at the Monthly, Weekly and Daily timeframes of your pair(s).
- What are the current trends?
- Is there high probability that the current trend will continue for another 24+ hours based on the latest candlestick setups?
- Read high impact news on each pair (and complementary pair).
- Ask: “Is news being released during the open/close of the market? If so, can I identify a ‘safe’ entry / exit plan?
If you can answer “Yes!” to the questions above, you can successfully day trade forex.
Dangers of Trading Forex
One thousand dollars just went down the toilet. I stood there looking at my Galaxy S7, feeling a mix of confusion, frustration and fear… my new trading account balance went from over $1,050 to about $20 in under 1 week.
Hey… No one said this journey would be easy! But, how did I get here?
The ‘game plan’ was to put in 1000 and double it within 7 days. EASY!
For the past 4 weeks I’d been following two traders who manage a forex chatroom. The overall strategy is to wait until a W or M appears and ride the wave up or down respectively.
It’s a solid strategy if: you’re patient, have enough leverage (to keep your risk low) and use a stop loss for each trade.
… I’m impatient, strike one, on the other hand I had enough leverage. The main issue was that I didn’t use a stop loss… big mistake.
Well known forex traders often claim that they do not use automated exits to protect their capital should a trade go against them.
Hey, if that’s how you roll, it’s you’re business… HOWEVER… if you’re just getting started, or if you care about retaining your investments, it is in your best interest to structure your trading plan accordingly.
I’ve seen too many traders loose money unnecessarily because they didn’t use an effective money management plan.
Money Management is my number 1 reason fore being a successful forex trader.
Doesn’t that make sense?
For example: You start with an account size of $5000 or even $500. If you use $100 dollars or $10 per PIP, (a unit of measurement between one cent to the next), and your trade goes in the opposite direction of your goal, the longer you wait to exit that trade the more dangerous that trade becomes to preserving your capital.
My students learn early on how to structure each trade based on their unique account size.
One money management plan doesn’t fit all people. That’s why won’t I share with you what I think is the best money management plan for forex traders. Not in this setting that is.
We have different goals, unique circumstances and values that require a varied approach.
If I tell you not to use more than 1.5% of your trading account at a time you might think I’m crazy and run for the hills, never to return. Which isn’t the goal.
The goal is to ensure you’re setup for success and that includes using proper money management during each trade.
In this article you learned:
- What the forex marketing is,
- How we use forex it to make money,
- Some of the risks involved with trading forex,
- Understanding your own approach to money management
- How to gain additional support towards becoming consistently profitable.
Let me know what you think of this beginners guide I’ve shared with you. What’s been your experience trading forex? If you have any more ideas on what has worked for you, or what hasn’t, I’d love to learn more. So, go ahead… leave a comment below and let’s discuss!
If you haven’t seen my Top 2019 Forex Trading Strategy video, check it out!