From Newbie to Veteran: Journey of a Trader |
I have been trading currencies for a few years now with some success and some failures. I have spent countless hours and large sums of money trying to educate myself in order to gain an edge. This blog is about the journey from a beginner to a pro trader. |
The barrier of entry to retail FX trading is very low. All you need is money to fund your account and an opinion on the markets.
Even though the tools for trading FX are within the reach of most aspiring traders, staying profitable is a goal that only a few traders can say they’ve achieved. What makes a trader successful? We can debate that for ages. In his book “Way of the Turtle: The Secret Methods That Turned Ordinary People into Legendary Traders,” Curtis M. Faith says, “trade with an edge, manage risk, be consistent, and keep it simple.”
Instead of funding their account, most new FX traders fall into the trap of spending a small fortune on expensive, exclusive workshops or seminars where supposedly the “secrets” of FX trading are shared.
The reality is far more simple. There is no big secret or a strategy that is fool proof. All you need to be successful is a method that statistically puts the odds of winning in your favor over the long run.
It is important, however, to get acquainted with some statistical concepts such as positive expectations and game theory.
The following websites offer comprehensive free courses. - http://www.babypips.com/school/- http://www.fxstreet.com/education/learning-center/
Knowledge is key, but experience is really the best teacher.
I have been trading currencies for about 2 years with my ups and my downs. When I first started I thought it was my straight ticket to riches. What I did not realize is that the journey had multiple stops along the way. I still believe that a trader can live off his or her trading activities, but before it happens, the trader should expect many years of disappointments, small successes and great frustrations.
The act of trading is extremely simple. There are only two major actions: going long or short. If it’s that simple, then why do so many aspiring traders fail? I don’t think I have the definitive answer, but I know it must include a lack of understanding of the markets, the instruments being traded, and finally, a lack of understanding about ones self.
The markets and the instruments can be taught through books, DVDs, seminars and workshops. Unfortunately the most crucial part of trading, knowing yourself, is not easily taught. Malcolm Gladwell’s book, “Outliers: The Story of Success” touches on the idea that it takes time to master a skill. In his book, he promotes the idea that 10,000 hours of work are needed before something becomes second nature, as trading should be.
Ego has probably cost traders millions of dollars in bad trades this year. A certain amount of confidence is necessary when it comes to trading, but the moment a trader becomes overconfident, the market will teach the trader a lesson about humility. Trade the market you have and not the market you want or think you have in front of you. Make sure the reason why you don’t have a clear picture of the market is not caused by your unchecked emotions.
