Our 7 step process to go from a rookie on a demo account to a confident live forex trader.
Forex is the largest and most popular market in the world, but that certainly doesn’t make the process of going from demo to live trading any easier.
We’ve come up with 7 essential steps that any new trader should follow, before being certain that you’re ready to start risking your hard earned money within the markets.
1. Open a Forex Demo Account
The first step that any new trader needs to take is to open a forex demo account.
At Propex24, the process is quick, easy and painless, so there are no excuses for not starting your forex trading journey right here and now.
As a beginner in any field, you only improve through practice and repetition. Well, forex trading is no different.
A demo account allows you to start watching the market and learning the way it behaves throughout the four main trading sessions in a day.
As you’re trading on virtual money, we’d even encourage you to make as many mistakes as you can.
It’s the only way you’re going to learn after all.
2. Understand Your Personality Type
Now you have a forex demo account, it’s time to turn your attention within.
There is no single, correct way of trading forex so you’re able to trade in a way that suits your personality type and schedule.
Are you the type of person that loves action? Always needing to be engaged with what’s in front of you, otherwise you’re bored?
Or maybe you’re the type of person that’s more laid back? You have a deeply analytical mind and need to make calculated, high probability decisions/.
Well, in order to be a consistently profitable forex trader, it’s imperative that you develop a trading strategy that is in-sync with your personality type.
If you don’t and there’s too much of a mismatch between your personality and trading style, then your account is destined for certain destruction.
3. Figure Out Your Goals From Trading
Forex trading is not a get rich quick scheme. Get that into your head right here, right now.
If you’re getting into this game because you want to take shortcuts, then you may as well just head down to the local casino and put all your money on red or black.
Consistently high monetary rewards from forex trading are most certainly attainable, but you have to manage your expectations and understand what it truly takes to get to that point.
As a result, new forex traders need to set much more modest, attainable goals that you’re going to hit and keep hitting.
Setting goals that focus on the process rather than purely how much money you intend to make is the key to generating long term success as a trader.
Goals such as time spent in front of your charts, not deviating from your strategy or allowing your stop loss to be hit are perfect examples of process driven goals.
4. Build a Trading Strategy To Suit
After you understand the type of person you are and what it is that actually makes you tick, you can get to the fun part of developing an actual forex trading strategy.
Many trading strategies focus solely on either technical or fundamental analysis, but the best ones incorporate a mixture of the two.
At its most basic, your trading strategy must incorporate rules for when you’ll enter and exit the market.
These rules can be based on time, price or a certain mathematically driven event. The more detail your forex trading strategy incorporates, the better off you’ll be.
But just remember that you can have the most detailed trading strategy and still choose to ignore it with just a single click on your mouse.
The best trading strategy is one that you’re both comfortable using and one that you have full trust in following over the long term, even if short term results have been poor.
5. Incorporate a Risk Management Strategy
The entry and exit rules of your trading strategy are only half of what’s actually required when developing a fully featured trading strategy.
In order to actually trust your trading strategy, you need to have done the math and incorporated a full risk management strategy into your daily trading.
You’ve heard the cliche that forex trading isn’t gambling and your risk management strategy is what proves this statement.
The house always wins because the casino has an edge in every game that they let clients play.
To find the risk management edge that your trading strategy can exploit, calculate the winning percentage of your trading strategy using a number of different risk:reward ratios.
This will allow you to find the optimal balance between win rate and risk:reward, ultimately showing you how to achieve the safest returns over the long run.
6. Journal Everything You Do
There are a number of different ways to journal your trading, but the most important aspect of keeping a trade journal is that you do it consistently.
You can have the most elaborate trading journal, but it doesn’t do any good for your trading if you can’t be bothered writing in it when you’re sad or you don’t want to read it back.
Find the right balance between detail and simplicity that works for you.
A trading journal could be something as simple as a blank Excel spreadsheet that automatically populates after every trade, or as detailed as a notebook featuring your moods and feelings throughout the entire process.
When the markets are closed or you have some down time, make sure that you’re going back to study your journal.
Find weak points in your trading strategy or psychology around trade management and make the required adjustments to your strategy.
7. It’s Time to Go Live – Only If You’re Ready
No two traders are alike and as a result, there’s no hard and fast rule that says when you’re ready to go live.
You’re just ready when you’re ready, but trust us. You’ll know when you are!
When you do make the transition from demo to live, the most important thing you can do is to start treating your account in terms of percentages rather than dollar figures.
Think of your stop loss as a percentage of your trading account risked and your take profit as a potential percentage gained.
Trading calculators can take the complicated math behind position sizing out of your hands and ensure that your account is always consistently and safely growing.
The bottom line here is that forex trading is an art, not a science and the only way to become consistently profitable is through practice and discipline.
Start your forex trading journey by clicking here and open a demo account today.