Last updated on October 10th, 2022 at 02:23 pm
I would like to share with you these 7 secrets about forex trading I wish I knew when I was getting started so you may avoid making mistakes when starting as a beginner trader.
7 Secrets About Forex Trading I Wish I Knew When I Was Getting Started
1. Success Will Never Happen Overnight
I did not know that a trader must put in a lot of hard work and be patient with the forex market. Instead of focusing on creating a residual income that could pay my bills, I treated the forex business like a get rich quick opportunity where I could invest a little amount of money and make thousands of dollars within a year.
My ignorance caused me and I ended up losing a lot of money while trying to become rich quickly through shortcuts.
2. Forex Is Not a Job but a Business
A business can never give a fixed income every day, week, month, or year. Only traditional jobs where a person is employed can guarantee a fixed salary.
Sometimes Forex traders get a lot of profits, while at times they incur losses. At the end of a trading period, say a month, a trader always closes in either profits or losses on average.
3. Successful Traders Also Incur Losses
Just like most beginner forex traders, I used to believe that successful traders close all their trades in profit. If you believe that crap too, you are wrong! Successful traders are not immune to losses in the forex market.
But one thing I came to learn is that they do not trade to record profits in all the trades they open, nor do they trade to lose. But they trade to make consistent profits so that they can close in profits after a given trading period.
4. Most “Successful Traders” Are From “Hell”
Have you seen people bragging online about winning big in Forex? Have you seen losing trades in the screenshots they share? Probably not!
The “traders” bragging about their market achievements are hell-bent on making beginner traders stay where they are without making any progress. That is true because their screenshots make beginner traders approach the forex market believing they will always close their trades in profits. The “successful traders” never show losses and probably explain why they lost in those trades.
I came to learn that successful forex traders are “killing” the market in silence. They are not noisy because they have no reason to prove to the public that they are making money in forex. In fact, most people who keep sharing screenshots with trades closed in profits are scammers looking for unsuspecting citizens to steal from. So, avoid them at all costs.
5. Successful Traders Set Reasonable Profit Targets
During my early days in the forex market, I kept searching about how much profit a trader should target. Here is what I came to find out later: A trader should not set fixed targets on how much money they want to make daily or weekly. Rather, it is recommended to set a reasonable percentage of your capital that you want to achieve monthly, quarterly, or yearly.
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For instance, you can say that by the end of this month, I look forward to recording a profit of 5% of my trading capital. If you invest $10,000 in that case, it is possible to net $500 by the end of the month.
That is 5% of the trading capital. Sometimes the return will be higher, while at times, it will be lower. It’s all about how disciplined you are in the market.
6. You Need a Lot of Money to Become Rich by Trading Forex
Most people indeed joinForex trading to become rich. But, sadly, they don’t want to believe that it is very hard to become rich through Forex trading if a trader does not invest a reasonable trading capital.
By saying “you need a lot of money”, I do not have a specific figure that portrays how much that is because different people consider different amounts of money a lot. That is due to differences in people’s net worth.
But the truth is that any trader who depends on forex and has a trading capital of less than $1000 will quit the business soon. Especially if they are poor risk managers.
7. Best Currency Pair for Beginners Is EUR/USD
Nobody told me that not every currency pair is suitable for a beginner. As a matter of fact, I loved trading gold because I could open a trade and witness massive pips movement in minutes. But what I learned after losing a lot of money because of trading extremely volatile pairs is thatEuro/USDis the best currency pair for beginner forex traders. This currency pair is not as volatile as other pairs. Because of that, a trader’s chances of blowing their account when trading Euro/USD is minimal.
If you must add another currency pair to your list, it should beGBP/USD.
FAQs Concerning Secrets About Forex Trading I Did Not Know
Who Should Not Trade Forex?
1. People who can’t afford to lose their capital
Sometimes the forex market tends to be very volatile. You canloseyour money in seconds if you don’t know what you are doing. If you have trading capital(no matter how much it is) and can’t afford to lose it, don’t invest that money in forex.
2. People who don’t have a separate source of income
If a trader ventures into a new business, for the business to grow, the trader needs a separate source of income to fund the business’s operational costs like rent until the business is stable.
In Forex, it is advisable not to depend on the profits you get from your trades if you are compounding a small account.
3. People who are not ready to learn
Statistic states that over 90% of people who join the forex business give up within three months. Why? They do not take their time to learn.
You may find someone opening a new forex trading account on Sunday. Because he has $100 he can afford to lose, he deposits the amount.
He then places his first trade on Monday. His trade volume is set at one lot size(1 pip=$10). Can you guess what is most likely to happen to his account? Well, his account is blown if the market moves ten pips against his open position.
This person has just lost his $100 within minutes because he does not know what he is doing.
The rule of thumb is that if a trader doesn’t have time to learn how to trade the forex markets, they should find something else to do and forget about trading.
Conclusion
I believe this post explaining the 7 secrets about forex trading I did not know has opened your eyes to view the forex market from another angle. If you feel discouraged about becoming a trader, good luck in your next venture. But if you still wish to proceed with forex trading, congratulations! You are already ahead of many people who began trading about three months ago. All you need to do now is close your ears to the noise out there and keep learning.
We will talk about the best way to practice forex trading in the next article. Ask your questions in the comment box below and we will respond immediately.
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