The best way to learn forex trading might surprise you. Because it’s contrary to what the mass does. If you asked most traders this question, they would usually say, trade a demo account for say, a minimum of six months. I say, that’s only a good way to learn forex trading and not the best way to learn to trade. You can try to guess why this is so. There are two things here: The best way to learn forex trading and (a good way of) learning forex trading. Now the best way to learn forex trading is to actually trade real money. Not demo. Astonished? Read on to find out why.
I won’t call myself a pro forex trader, nor an amateur. Do you know the pros? They are the forex millionaires and billionaires. Those are the people I call pros. But being over five years in the game, I have learned enough to share with you what I think is the best way to learn forex trading. When you start with forex trading as a greenhorn, one thing is obvious — Read. Ok but to what extent? For how long? Well, that will depend on you and how fast you grasp and learn from what you read. Personally, I would recommend BabyPips School of Pipsology, complete it, follow Richard Perry’s webinars on FXStreet, and buy Come Into My Trading Room by Alexander Elder and that’s enough! Yeah, really. That will be enough reading and listening and watching. All you’ll ever need. The best way to learn forex trading is by getting your hands dirty, practicing with real money, and putting your hard-earned cash on the line, even from the beginning. You don’t have the balls to do that? Then I’m afraid this is not your game. Let me show you how.
Learning Formally (Well, to some extent)
Online, there’s a plethora of information on forex trading that you can find for free. Most of which are crap though. It’s wise only to limit yourself to what and the amount of stuff you read especially if you’re not so experienced. This will prevent you from getting yourself confused with information overload. The School of Pipsology has everything you need to get you off the ground. On FXStreet you can join and watch webinars that teach and talk about what moves the market and details of some technical analysis strategies. All these are for free. You could get yourself a good read on forex, just buy at least one book from Amazon and read while on the bus or in the waiting room, in the toilet, wherever, doesn’t really matter. Just get the book I recommended above to get yourself enlightened, in a more or less passive way. This first part of getting the best way to learn to trade forex is essential, but don’t overdo this step. You’ll get bored quickly or get yourself bemused. The information you need to start is enough. The real, best way to learn is not by reading anything anyone writes everywhere.
After a couple of readings, you need to trade a demo account. Now here’s the tricky part. You don’t trade a demo account for long. Why? Because I said so! Kidding. Most brokers, on a demo account, will give you USD50,000 of virtual money to start with. The question is, on a real account are you actually going to start with USD50,000? I doubt. A trading demo is nowhere near the reality of forex trading. It’s only essential to learn how technical/fundamental analysis works. You use it to actually understand how the indicators you read about work and how economic news affects price action. So on a demo account, if you can set the amount of virtual money to start with, make it as realistic as possible. How much would you start with on a real trading account? USD500? USD2,000? Set your demo money around the same amount that you would trade with when you become ready to trade on real money. What about the duration of trading a demo account? I would say two months is enough to learn about indicators and develop some signal strategies. One broker I recommend for trading a demo account is Exness. Get yourself an Exness demo account now and get to work.
Getting into the wilderness
Forex trading involves high risks, just like any investment outfit. Aside from the genuine risks in trading, there are crooks and scammers who will do anything to get your money. Brokers can sometimes be scammers, some will put re-quotes on your account, delay your executions, and do all sorts of weird stuff to see you lose. As a matter of fact, retail trading is meant to make us lose. It’s only a tiny percentage of traders that win. Getting to be a part of this handful of traders is very hard. Like it or not. But once you get there, you’d be very happy you actually got into this business. It’s where the fun is. You could go on holiday anywhere you like for as long as you want! But it takes hard work, dedication, and discipline. There are some trusted brokers I personally recommend: Exness, Tallinex, and Dukascopy. Tallinex because of the MT4 platform (which makes it easy and comfortable to trade) and the really low spreads and Dukascopy for their awesome Java-powered trading platform and speed of execution. If you’re using a Mac for example, the Dukascopy platform, JForex does perfectly on Mac and Windows machines. I use both brokers, the only two I use.
Now the hard part. After learning for a couple of months on a demo, now is the time to put in some real money. USD 1,000 is enough, or even half of it. You start and make sure you trade the tiniest lots possible. This is not the time to set big goals, this is where you take time to master and control your psychology and emotions. This is where the real learning is. Here you’re trading with real money, it’s going to be hard, but learning the hard way has always proven to be worthwhile. You may blow your account once, twice or more. But if blowing your account doesn’t teach you anything new about how to make money in the forex market, then I don’t know what else will. I must mention here that it’s only wise and important to actually start with real money but with money that you can afford to lose in exchange for a couple of lessons. Once you find what works and build some discipline, you can start to make consistent profits. Things will start to fall into place. Most traders quit after losing a couple of times, that’s OK, because then they learn that trading forex is not for them. Forex trading can’t be for everyone, the same way dancing is not for me. I have met really awesome girls in big clubs but lost them just because I don’t know how to dance even though the money from trading is sitting there somewhere. But life has to go on.
“Only those who dare to fail greatly can ever achieve greatly.” – Robert F. Kennedy
Now, Feel free to call yourself a trader
Trading is hard, honestly. If the challenges, in the beginning, forced me to quit, I wouldn’t be in my sixth year of trading and I wouldn’t have realized the potential of trading. This business is real and there’s lots of money to be made, but there’s no easy way to get there. Read a few books, learn about technical analysis, get to know what moves the market, like say the Non-farm Payroll among others, start with real money and trade the smallest lots, lose a couple of times (this stage is inevitable), then feel free to call yourself a trader who actually trades for a living or for any other purpose you can think of. If you keep the zeal and optimism and discipline and really learn from your mistakes, there’s no way you can be a loser. There’s a limited number of mistakes you can make, this is one thing you have to know. The thing to do is to overcome all the fears and errors and actually start making money. If others are making it, if I am making it, why can’t you?