This is the first article I write using my personal trading experience as a guide for both beginner and skilled currency traders, so I hope it will be useful.
1. Never blame the market for your own mistakes!
Furthermore, never try to blame anyone else for your own mistakes. Although it helps you from an emotional point to blame someone or something else, it won't do any good in the long run: once you finally realize that you are the only one to blame, it will be too late and your trading account(s) will be nearly at zero - in the best case scenario.
Do your best to take note of every single trading mistake you make and write it down on a post-it! Stick it on the screen and watch it every single time you are about to enter a new trade! Learn not to repeat the same mistakes. Analyzing past-mistakes helps you to avoid them in the future as it is all about constant improvement.
2. Practice is everything! Practice, practice and practice!
It takes years of studying and practicing to become a good doctor, engineer or a good airplane pilot (by the way, I don't believe that Al Qaeda's plane hijackers learned to fly in just a few months).
Why would someone expect that becoming a good trader takes less time? It doesn't make sense.
Have patience and try developing your trading strategies on demo accounts, paper trading and so on. Don't just jump into live trading the second month you've heard about currency trading! Also keep in mind that live trading is totally different from demo: you could have turned $1000 into 1 million within a month on demo but once you start it live, the whole galaxy, zodiac signs, spirits, anti-matter and especially your own thoughts may turn against you and you will start to see all those stops hit one after another.
3. Don't be fooled by fancy advertisements on the net and false claims.
Don't expect to make a fortune by spending another fortune on signals services, proven techniques and trading strategy books, secret formulas and other kind of get rich soon! Do like I did! products and services. More than 95% of people lose in Forex trading and drop it within a year or so. Do you think that all those 95% of traders didn't try secret formulas, signals providers, automated trading and other methods? You bet they did! - Hence the 95% losers.
This reminds me of a funny ad I see all over the place which states Trading the EURO is easy! - You bet it is! NOT!
- It could be easy to trade one of the most noisy and unpredictable pairs... but it just depends on what side of the trading platform you are! ;-)
4. Trading is not for everyone, simple as that.
Like any other discipline, activity or simple hobby - trading requires talent and motivation. You should already discover within the first months if you are talented on taking trading decisions. Don't expect to discover that only after few years - by that time, you should have already filled your broker's pocket with your money. If you are talented and meant to become a successful trader, even a coin toss strategy or (and especially) your gut feeling will be enough to trade profitably.
5. Keep it simple!
chart example 1 (click to enlarge): Don't use such things! If anyone else will look at it may think that you are either crazy or a genius (in case you understand, watch and use everything on such chart).
Stuffing 50 fancy indicators on your big-screen charts won't help you but just cause a lot of confusion. Choose a neat arrangement of few preferred indicators (those that work best for you!)
I mentioned 'gut feeling' in point 4: that's highly required and will help you to keep the charts clean: in fact you could even trade with no indicators, by watching price action.
Keeping the charts as simple as you are comfortable with will also allow you to interpret the market in less time: If it takes 30 minutes to analyze a chart in order to take a trading decision, it means that you've just wasted 20-25 minutes out of your precious time. Use the precious time for other activities and don't become addicted to your charts by staring at them for all day long - walk the dog, ride a bike, watch TV, play video-games, meet new people, hang out with friends and family, get a hobby (care to go fishing? I like it a lot) etc - life is short (don't read bearish)!
Technical analysis is always right! But you know why?
For any market move, in any direction, at any given time, there will be at least one indicator to confirm that move. So, if indicator A has not provided you the clue about the next market move, indicator B, X or whatever - will! But what if you use them all? They will be in a total contradiction all the time and you will miss the big picture, the clear signs, by focusing on what the indicators tell you instead of focusing on what the market tells you. Also be aware that all indicators look great and accurate on the left side of the screen (past bars/candles): its easy to apply them on completed market moves.
Research, news, analysis and advisory sources:
Choose your research, news sources carefully! Keep the list small. Don't waste 4 hours on reading analysis and news just to decide on taking a 50 pips trade. Check the analyst's and site's reputation before considering their advice. Also be aware that research sites and services maintained by trading brokers could be highly biased.
By the time I stopped checking a dozen trading sites for commentary, analysis and recommendations, I realized I do better by myself and became profitable. No matter if everyone was right, wrong or in a random contradiction state (I like how it sounds), I just couldn't decide on my own and had been (indirectly) manipulated by their opinions. I rarely read other's opinion on the pairs I trade.
Hey! Checking less research & analysis sites shouldn't stop you for coming back here on my site! :-)
This is all for now and I will continue some other time, on Part II.
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Thank you for your attention and I wish you all good luck trading!
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