eToro – Forex Trading Forum

[Tropezienne]

I imagine that most of us discovered the forex during our internet searches for on line money-making ideas or for an on line business. In that case we will also have discovered that for some people forex is a great way to make an income but that for the majority it is a no man's land in which financial losses are common.

We like the success stories and when we consider our forex future we tend not to see ourselves as one of the lost souls in the wilderness. It amazes me how some people spend a day or two on their practice account, have a few 'wins' then deposit their real hard earned money in a Real account and are surprised when they lose it.

What they lack is knowledge and so have landed on the fast track into no man's land.

Take the time to increase your forex knowledge – forums like this are a great start. Build your knowledge slowly and surely, test it out virtually before using real money. Nothing good ever comes too easily or too quickly. So treat your first few months in forex trading as an apprenticeship – just like any profession.

Don't switch from Practice to Real trading until you regularly have more winning than losing trades.

[Tropezienne]

Although the forex involves buying and selling currencies – remember that they are not concrete commodities like shoes for example. A shoe shop wants to stock it's shelves as cheaply as possible and sell the shoes for a profit. In any normal shopping street there is a wide variety of shops and not a lot of direct competition for our shoe shop.

But what if the whole shopping mall was full of shoes shops … think about that ….

…. because that is a good analogy for the forex market.

On the forex market all the shops are buying and selling exactly the same thing. Currencies. Each 'currency shop' has one proprietor (you) and one client (you !). The shops buy from and sell to each other – so you are in direct competition with each and every other forex trader.

Forex is a zero sum activity.

The only advantage you can possibly have over other traders is to know when the currency prices are going to change – and to get in there !

Without knowledge of the forex your little one-person forex shop will fold.

[Tropezienne]

I've said it elsewhere on these forums – and I'll say it again :

'observation, observation, observation '

As with all great learning tools simplicity is the key. All you have to do is choose two or three currency pairs and make them your babies ! Watch them, watch their behaviour, watch their moves. You don't have to spend hours at this. An hour a day can be effective if your time is limited. Better still is a couple of session of 1 – 2 hours most days.

By observing and becoming familiar with 2 or 3 currency pairs you will develop the knowledge, the analytical skills and the instincts needed to be a forex trader.

I floundered around A LOT at first.

I played around with 10 or more currency pairs. Then I realised that I needed to rationalise what I was doing because I was not making any progress. So I concentrated on the 'biggies' GBP/USD and EUR/USD. I set up one hour candlestick charts for them each day and observed them each morning for and hour or so around the London opening.

Later, after I had learned about correlation, I added USD/CHF to the mix.

[Tropezienne]

So it's time to apply the knowledge that you have begun to acquire in order to become a forex trader. There is not a lot of knowledge that is absolutely necessary - the key is the mix of knowledge.

Th necessary knowledge comprises practical facts, the behaviour of currencies, some technical tools, a familiarity with the trading platform, absorption the nuances of the forex world, your constructive activity within forex communities and the gradual honing of your forex instincts.

From the very early stages of this gathering together of your forex skills you need to apply your knowledge – for this you will use your Practice account.

Hopefully, you already have a Practice account with eToro – if not, sign up for one now. It's free and there is no pressure to invest in a real account. Also, we are here to help you if you have any questions.

[Tropezienne]

Your daily observation of the charts of two or three currency pairs will gradually make the charts comfortable familiar. Reading them will become intuitive. Interpreting them will be stress-less and increasingly accurate.

This regular observation of the charts of a limited number of currency pairs will ensure the absorption of vast amounts of relevant information. And what is more, you will not have spent hundreds of hours and dollars in the tedious study of an impenetrable, over-technical forex course.

You will achieve something very valuable – something that can't be bought. You will have developed intuitive responses to the charts which will lead you to your own natural trading style and method. This is the way to a positive trading career.

[Tropezienne]

DO NOT RUSH INTO FOREX TRADING !

Don't be associated with that sad statistic – the 95% of new traders who fail. Whilst you are developing you trading knowledge you may not trade with real money for four or maybe even six months. But if you wait, patiently until the time is right, until you are ready, you will begin to earn from trading the forex.

Finally – when I discuss the development of forex knowledge I am talking about your personal knowledge. Nobody else's. Not the spammer who is trying to sell you a 'get quick rich with forex' signal or scheme. They can make their product sound sooooooooooo attractive – but that is because they are sales people and not forex traders.

At the end of the day you will be a better trader when you can rely on your own trading intuition – developed over time and with care. You will naturally know when to trade and when NOT to trade.