A lot of people go into forex without even making prior research or without even knowing what they are going into. Forex requires a lot of things before you go into it. Below are a few things you need to do before going live.
Tip 1: Get your shit together
This should be the first step you need to do before you ever think of starting out in trading. For God's sake trading has to deal with a lot of emotions and if your life is in shambles or close to shambles, you shouldn’t venture into trading. Trading forex or stocks requires a lot of calmness or else you will end up making rash decisions. If your life issues have not been sorted you will end up being pressured, disorganized, and eventually frustrated. So before venturing into trading, take care of your relationship, health, and anything that means so much to you. if you have a lot of unfinished issues, you have no business in the forex market
Tip 2. Set your financial goals.
Setting goals make things doable and achievable. As a starting trader, you should draw or write down your financial goals. The goals should include your return on investment per year, your compounding interval, and a lot more. After setting it, you could go as far as keeping it somewhere accessible so you can always look at it and draw inspiration from it.
When setting financial goals it is important to note the reason why you are trading. Most traders who trade do so to make more money however that reason is not enough to push one when things go rough if not a lot of the traders wouldn't have quit as soon as their accounts were blown. In essence, tell yourself the reason why you want to make such type of money. It could be to give your mother a better life or could be to help the needy. These clear cut reasons give inspiration and motivation when the chips are down.
Tip 3 Learn all you can
A lot of people think they can bypass this crucial step not knowinge that they are fast-tracking themselves to rock bottom. . The saying that knowledge is power is not to be toyed with when trading in the financial market. When you have adequate knowledge in the financial markets you will be so powerful and the mistakes amateurs make will totally be avoided by a person who is very knowledgeable. This goes to say that you should try as much as possible to absorb all you can through the various modes of learning. You can learn through books, videos, mentors, professional courses, hedge fund traders, and private traders who teach. Trust me, whatever you learn on your journey as a trader will be of help along the way in your trading journey. I learned most of the things I know today from books, youtube videos, podcasts, and experienced traders.
Tip 4: Determine the type of trader you are
There are different types of traders. Some people are scalpers while others are position traders. When you are trying to determine the type of trader you are, a lot of things come to play. Some of the things include; your lifestyle, your way of thinking, and how you handle your emotions.
Once you determine the type of trader you are, you can then figure out the time frame that suits your schedule or life activity. If you are a trader that likes to look at the screen for any small change in price and take the little profits, then you can be a scalper. If you are someone that wants to put a trade setup and come back weeks later,, you can decide to be a swing trader.
After this, know your risk threshold implying know what you can take. A lot of people find out their risk threshold with their standard live account which shouldn’t be so. You should know if you are a low-risk trader, a medium risk trader, or a high-risk trader from demo trading.
If you have started a live account without knowing what type of trader you are, do well to stop and go straight to demo. This will save you your capital and emotional torture.
Draw your trading plan
The role of a plan in forex trading cannot be overemphasized. I always say that forex trading is not a hobby neither is it a gamble. It is a business and anyone who wants to do this business must be willing to be meticulous and careful about it. There is this saying;
if you fail to plan, you have planned to fail.
In the forex trading business, no plan means a blown account. If you doubt then try trading without a plan, I give you 1 month and you will come back wrecked.
A trading plan can be likened to a business plan. What then is a trading plan? This is the step by step process of how you want to execute your trades so as to reach your set goals. If you notice when warriors are going for a battle, they go into a room and then plan their strategy for execution so they can come out victorious.
You could check my previous post on how to draw a trading plan. '
This should be all for now. I will be writing other things one needs to do before setting out to trade in the financial markets
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