” While moving around aimlessly in the internet, I have chanced to come across your site. It appeared so attractive that I have gone through as many pages as I could and finally come to the conclusion that I must visit this site regularly.
As for myself, I am relatively new in the field of currency-trading. I had read a lot of e-books and practiced my acquired skills in some demo-accounts. Enthused by consecutive and relatively consistent success I started to believe that I had mastered all the skills necessary to become a successful currency trader. I then opened a real account with all the savings I had and started my real journey. The consequence of my endeavor proved to be fatal !!!!
I have lost all my money. I do not understand why for some days I remain puzzled and behave most irrationally and lost my all.
This blow has proved to be an eye-opener. I have realized that my knowledge about both the market and about myself is far from satisfactory. I am yet to learn a lot before even thinking of playing with real money. I have to learn everything afresh from a real master. I still believe that I can learn the subject and in course of time I must be a successful trader.
I have wrote so many things just for the new-comers. This is not just as it appears. It is purely a game of applied psychology- controlling impulses of fear and greed- applying earned knowledge judiciously.
I cannot sufficiently express how happy I am meeting you. You are the person I am looking after.
You have started an excellent work. Countless people around the world will remain thankful to you for ever. “
I appreciate his kindness and I am happy that my efforts could be any of help. Unfortunately, this happens to more than 95% of the beginners and he is not alone. Something that changes a beginner to a professional trader should happen after this stage but unfortunately 99% of those who come through this stage, give up and never think about forex or any other kind of investment and trading. They will complain that they are not for trading and they can not become traders.
I have explained in one of my other articles that you have to have three things to become a good and successful trader:
1. Knowledge
2. Experience
3. Suitable mental and psychological condition
If you lose your money as soon as you start working with the real account you should ask yourself that “Do I have enough knowledge? Do I have enough experience? Am I mentally and psychologically ready to trade with my money?”
If you answered no to any of the above questions, you should not trade with the real account.
You can learn everything about forex trading through the internet. Internet is full of free and invaluable information about forex. There are also free videos that you can watch and learn a lot. They all talk about trends, patterns, indicators, candle sticks, fundamentals and … and you can learn all of them word by word.
Then you sign up for a demo account and start trading. Sometimes your first trades are very good and it deceives you that you have learned everything and now you can trade with real money but you don’t know that forex market is like an ocean. Sometimes it is calm. Sometimes it is stormy and sometimes there is a Tsunami because of an earthquake. Someone who has experienced sailing when the ocean has been calm may think that he is a sailor but he is not aware that the storm is on the way and he is not experienced enough to face a real storm. He goes to ocean and becomes trapped by the storm.
Beginners should keep in their mind that a few successful trades with the demo account doesn’t mean that they are good traders and a few successful trades with the real account, doesn’t mean that they can increase the amount of the trades.
Beginners have to keep on trading with the demo at least for few months. The other thing is that they have to have a system. Trading with the demo account without an especial and well-described system is wasting of time. You have to know what kind of signals you should be waiting for before you buy and sell and you should know that you only buy and sell when you see the signals not when you think that you are seeing the signals. Like waiting behind the red light. You start moving only when you see the green light.
So you have to trade with the demo account at least for few months. You have to learn to get stuck to your system. You have to learn to control your emotions. You have to learn to control your fear and greed before you start working with real money.
Unfortunately some greedy brokers push the beginners to open real accounts. They are not smart enough to understand that they have to have long term traders not one day traders. Most beginners who lose their money, will never reload their accounts and so the brokers will lose them for good.
When you work with the demo account for few months, you feel a confidence in your heart. This confidence is not a false confidence because it is gained through practicing and experiencing. If you don’t feel a true confidence, keep on practicing with the demo account. It doesn’t matter for how long. One year or even two years. Nobody has determined a deadline for you. So don’t rush. The market is always there waiting for your money.
Then open a real account but please note that after opening a real account, you are at the BEGINNING of a new stage. Yes! Working with the real account is different from the demo account.
Why? Are the signals, charts, indicators, currency pairs and … different?
Absolutely not. They are all the same but something that is different is that you know that you are playing with your real money. The money that you have been working to the bone to collect. You don’t like to lose it. You want to increase it.
What will happen then?
You trade with more fear and greed. You don’t close the trade that goes against you because you don’t want to lose. You wait for the price to change the direction but it won’t and finally you decide to close your trade when you have lost a lot.
Or you keep a good trade to make more profit. You ignore the reversal signals and so you lose all the profit you had in your hand.
Sounds familiar, doesn’t it? :)
So what should you do?
1. Start learning first and complete your knowledge. Learn everything that you should know about the trends, patterns, support, resistance, candle sticks, reversal and continuation signals and … . There are a lot of websites that have these information for free. You have to spend at least three months to learn all these things.
2. Decide that if you want to be a swing trader or an intraday trader. As a beginner you should choose one of them because you have to be focused on one thing first.
3. Choose a system (strategy). Your system should be as simple as possible. Complicated systems are not applicable. You can only lose with them. A System should be as easy as 1, 2, 3. Also choose a system that works according to technique and knowledge not according to superstitions. In an e-book I read about a strategy that says you should buy when you see the price has gone up for 80 pips before noon!!!
4. Start trading with the demo account using the system you have chosen. If you see that you don’t like your system or it is not good, change it. Find a better and simpler system. Get stuck to it and test it over and over and over. Spend several months to one year with the demo account. Do not be fooled by some of the forums members who say “I have started working on forex two months ago and now I make 100 pips everyday”. This is not true.
5. Forget that the account you are working with it is a demo account. Consider it as a real account. When you see you are losing, think that it is your REAL money that is burning. And when you see that you are making profit think that it is going to your real bank account. Keep in your mind that if you rush and trade emotionally you lose your money. This will help you to experience your fear and greed before trading with the real account. If you experience them, you will learn to control them. Don’t let them show themselves right when you start trading with your real money.
6. Then start working with a real account BUT trade with a very very small amount of money. I don’t care if you have a $500k account or a $100 account. Start trading with the minimum amount that you can place an order. Keep on working with this amount of money for a few weeks. If you saw that you are trading exactly like when you have been trading with the demo account, increase the amount of the money gradually. Do not play with a huge amount of money after a few successful trades.
7. Don’t give up! Don’t get disappointed when you lose. Everybody loses at the beginning. Even the best traders lose in some of their trades. Learn from your mistakes. Keep in your mind that losing is part of the game. We do not practice to learn not to lose. We practice to learn how to lose small amounts and win big amounts. Your stop loss will be triggered in some cases. This is natural. It should not prevent you from entering to another trade.
If you work in the way I explained above, you will become a professional trader in about one year without losing your money and without having to reload your account.
Happy trading :)
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