The thought of placing your first trade using real money is both exciting and nerve-racking at the same time. You are eager to get started but at the same time you will probably be scared about the thought of potentially losing money (like so many other traders do). So it’s important to determine whether or not you’re ready to start trading with real money.
The fact is that nearly everyone who ventures into the world of forex trading will fail to come out ahead. In fact a large number of people will end up losing their entire trading capital. This is why there are several points to consider before you even think about entering your first trade.
First of all you need to be aware of the basics of forex trading. You should know how the currency markets move, which pairs are the most actively traded and which hours are the best to trade. You should also have a firm understanding of technical analysis, including an understanding of how you can use various different indicators to help you identify high-probability trading positions.
You should also have familiarized yourself with your chosen forex broker and their trading platform. You need to know how to enter and exit positions, how you can manually place your stop loss and limit orders, and how to use trailing stop losses if you plan on letting your winning trades run for as long as possible.
Finally (and most importantly) you need to have a profitable trading system in place. If you think you can generate profits just by using your gut instinct, or by trying to go long when the price looks too low and short when the price looks too high, then you are really going to struggle to make any money.
You need to take your time coming up with a trading method that will consistently generate profitable trades. It doesn’t necessarily have to have a very high success rate, because you can cut your losses early and let your winning trades run, but it must be able to generate profits when used on a long-term basis.
There are no guarantees of course but you should at least use several months worth of back-tested data to determine whether or not your system is likely to be profitable. Some traders are able to come up with their own winning system, while others will rely on third-party trading methods.
It doesn’t really matter as long as the method you eventually decide to choose is likely to earn you a decent income. Even if the strategy you use only generates profits of say 1% per month, you will still be performing substantially better than the thousands of other forex traders out there who are failing to make any money at all.
The point I want to get across in this article is that you will only be ready to place your first trade when you are familiar with the basics of forex trading and have a decent trading system in place.
Click on the following link for free forex tips and strategies, including the exact 4 hour trading strategy that James Woolley uses himself to trade the markets:
Winner’s Edge Trading, as seen on: