Starting Up in Forex Trading: Six Tips for Those Very New to the Trading World

Whatever you do when you start your journey in trading will be very important as it will largely determine the amount of time it will take for you to achieve success. When most people start trading they fall into a “marketing black hole” which drives them into a wasting cycle that generally ends up with most people giving up and with the few who do not give up and eventually “make it” wasting several years in the process of “climbing out” of the misinformation, misconceptions and wrong ideas planted by the marketing machine. On today’s post I seek to help those who are very new to trading – those who just started- so that they may start their trading careers on the “right foot” without falling into the problems most of us had to tackle in order to finally achieve success in trading.

Through the following paragraphs I will share with you six very useful tips which will allow you to walk a much more certain path towards a successful trading venture. Please remember that – although not set in stone – these guidelines stem from my experience and that of other traders I know and while following them will not guarantee success it will probably reduce the time you will take to achieve success by at least a few years. The below guidelines focus on helping you avoid the gathering of wrong misconceptions you will then have to erase and to build your trading career “on the rock”.

Tip 1. Do not gather knowledge from the Internet. It is true that the Internet is a marvelous place to gather information about many different subjects but the truth is that the information isn’t audited, peer reviewed or revised in many cases and therefore it is a very dangerous place to gather reliable pieces of information. If you go through the internet to build your trading knowledge you will most likely get confused and fall into the same mistakes hand in  hand with forum members, internet writers and marketers with a very reduced trading experience. If you want to reduce the time it will take you to achieve trading success, put away the internet at first. After a while you’ll be able to go online but first you need to get your ground knowledge built around sound sources (you wouldn’t want your kids going to “the Internet” instead of school, right ?).

Tip 2. Gather knowledge from reliable sources. When you start trading the most important thing you need to do is to gather knowledge (since you don’t have any) and this knowledge needs to be gathered from reliable sources of information. In the case of Forex trading, books written on aspects of the market by experienced economists and traders are definitely the way to go. The first thing I would advice anyone to do is to read from the experience of those who have already walked the path of trading. By reading these books you will also gain some perspective into what is a realistic achievable return and what is not.

Tip 3. Build understanding with your knowledge by YOURSELF. The next tip – which I consider vital – is to use the knowledge you gathered from the books you read to build a personal understanding of the markets and trading. With what you have read start paper trading or real trading with very small amounts of money and keep a very PRECISE record of all your trades and their characteristics, building a trading journal without the input from anyone else and analyzing it YOURSELF, is a large part of successful trading.

Tip 4. Do not search for the “black box” trading solution. If you want to become a successful trader you should understand from the beginning that there is no magical solution to your trading success. Searching for the “holy grail” is an endless quest which will only set back your true success in trading by a few years and potentially even a few thousand dollars – or sadly in most cases even more – so make sure you stay clear of the path of the “black box”. You should realize that YOU want to become a successful trader and therefore you must do all the work and learn how to do this, attempting to put this burden on someone else will only lead you into the jaws of hungry marketers and unsound trading tactics.

Tip 5. Just care about yourself, NOT about anyone else. One of the chief worries of new traders is to  produce profits in the fastest and easiest way. Usually traders become frustrated if their profits are reduced or if they read that someone else on a forum has been producing a 200% gain for the past two months. When you start trading your goal is to become a successful profitable trader NOT to attempt to find someone who produces X much or to compete with people online. You must worry about what you’re doing and what progress you’re making. As far as my experience has told me the best thing you can do is focus on your personal evolution as a trader and forget about everyone else.

Tip 6. Learn about statistics, and NOT just the most basic stuff ! Most of the unsound trading tactics and bad trading practices people carry out stem from a pure ignorance about even the most basic notions of statistics. In trading – a probability game – knowing your statistics form A to Z is one of the most important things you should do. Before you even start to consider system building or long term profitability you should learn a LOT about statistics and their usage in trading. Things like the edge ratio, Monte Carlo analysis, monthly distribution of returns, Chi-squared test, etc should be absolutely crystal clear for you. This will not only be important for you if you want to trade in an algorithmic way but even if you’re a manual trader the above knowledge will greatly help you understand the inherent risk behind your setups and how you can quantify if you have or don’t have a long term edge.

Even though the above tips are not a guaranteed mechanism to grant you success I would say that they will give you a very strong ground for your start as a successful trader. By building your trading knowledge based on sound sources from verified experienced traders, focusing on yourself and  building of knowledge and understanding you will be able to build a rock-solid foundation for your trading experience and potentially find yourself as a successful trader within half the time using half the money it would’ve taken you going through the very bad “online path-holy grail hunt” path most new traders go through.

If you would like to learn more about my work in automated trading and how you can get a true education about the development of algorithmic strategies for Forex trading please consider joining, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach towards automated trading in general . I hope you enjoyed this article ! :o)

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