As we stated in our article about trading Forex as a Business the most important investment you have to make is to educate yourself. It takes time, determination, and maybe a bit of money, but the rewards could be more than worth the effort—they could change you live your life.
Read on, and continue learning!
After you have started live trading you will probably be overwhelmed by excitement at first and you won’t focus too much on education. Staying focused and objective will be very important; it is highly unlikely that the strategy you start with is the best for you and you don’t need to learn anymore.
And even if the strategy is good, you can evolve in other parts of trading, psychology, money management, risk management to name only a few areas that you can improve.
Get informed about the fundamentals!
If you are new to trading and finance you can get lost to all the complex theories that are involved with forex markets and the economy.
Here are some suggested books to begin with:
- The Little Book of Currency Trading: How to Make Big Profits in the World of Forex by Kathy Lien
- A Three Dimensional Approach To Forex Trading by Anna Coulling
- Currency Wars: The Making of the Next Global Crisis by James Rickards
- Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daren Acemoglu
Don’t close your demo account!
The perks of having a practice field for trading don’t end when you open your live account. There are more reasons than I could count for maintaining a demo account besides your live one. Here are some of the main advantages:
- You can try out and practice new strategies
- You can trade your unconventional ideas
- You are able to get into new assets without risk
- If you have a losing streak you can go back to have a break from live trading
- You can try out new brokers
Stay open to new strategies
Don’t get married or obsessed with a strategy or idea—if it is not working. If you have a winning strategy, however, simple or outdated it looks compared to a fancy new one stick to what is working for you. But if something doesn’t work then don’t pursue it; there is an infinite number of strategies and indicators that might be much better for you.
You will be better off if you try new things from time to time and can broaden your scope both as an investor and as a trader.
Review your trading!
One of the few things that every successful trader agrees on is that you need to analyze your trading. The process is made very easy nowadays by the vast possibilities of trading platforms, but most of the experts believe in keeping your own notes; maybe just a few words per trade or even per day will suffice—you will get invaluable information from them later on!
As you move forward in your career you will be more and more occupied with your own performance as a trader. Here are some important points to look and make notes of:
- Analyze your winners… and your losers twice as much!
- When do you trade?
- Are your trades in line with the strategy?
- Are your sizes adequate
Analyzing your winners supposed to be easy, if you follow your trading rules it should be quite boring actually. The interesting things are in your losers. They tell a lot about you as a trader/investor.
Have you been following your rules? Were your positions inside your risk and size limits? Did you execute your stop loss properly? Although these might seem obvious it happens with almost every trader that he/she loses control of a trade or even a longer period…
If you are a day trader knowing what part of the day you are profitable in is vital. Also, identifying days of the week that are better or worse for your style is a great way to boost your profits.
All of these will be very easy to spot and follow if you have a trading journal, and identifying a problem is very close to solving it!
Whatever your strategies are these methods will help you in being a conscious observer of you performance and to keep improving constantly!