In my last post, I’ve discussed the many differences between my main hobby and income source “affiliate marketing” and, my recent craze: Forex. You can see that article here:
A lot has changed since last week, the main difference is I managed to turn €200 into €475, only to lose it all 15 minutes later in a freaky dip in the price of the dollar against the euro!
Needless to say, it was painful as shit! To make that much in one day and then lose it on a trade that seemed “impossible” to fail!
Not only that but 5 minutes after I went bust, the currency shot up (as I predicted) and I would’ve easily made another €120!
By that time, I stopped looking as it was just too painful to watch!
Yes, trading Forex is a serious deal and it can break your heart in seconds without remorse. That is why today I want to give you my experience trading Forex as a beginner and also the 9 lessons I have learned (so far) trading.
Please note that I am in no way an expert at trading FOREX, there are many other sites you should visit for concrete forex advice, tips, and strategies but these are my results, as a beginner, and what I have learned from them.
Take of them what you will but I assure you these lessons were learned the hard way so be careful out there trading!
So, let’s get into these 9 lessons that I never want to forget and hopefully you won’t either:
Trading Forex As A Beginner: 9 Lessons I Do Not Want To Forget
Start With A Demo Account
For the love of the Forex gods, please start with a free demo account before you even consider trading real money.
There are so many things you have to learn as a beginner that it’s unimaginable.
Making a mistake with a virtual $100,000 account (which you can create an unlimited number off) is one thing, playing just $100 with real money is suddenly a very much different story.
Yes, there are some lessons that you will only learn by playing the real deal but make sure you learn the basics of it all on a free account.
Luckily, we have that option nowadays. Imagine the world where you can’t “try it out”, just go for it and wing it.
Actually, you don’t have to imagine it all; just look at offline brick and mortar businesses that cost thousands to set up and you have no idea how’s it going to go.
Start with your demo account. Head on over to MetaTrader and either plays on the web or download the iPhone app which I love and where I do all my trading.
How awesome it is that you can literally make money from your phone!? What a time to be alive!
Do Not Get Greedy
One thing that made me go bust was the greed! I should’ve been happy that I’ve made €200 with my trading for that day but no; I didn’t even see them; I just wanted to make more and more and more.
That’s when the market bitch slapped me to the ground and lost everything.
I understand it; it’s very, very easy to get greedy with this.
I suggest you also practice being non-greedy with your free account as to teach you the lesson, but I have to warn you; it’s nothing compared to losing all your account in a few minutes!
Make Good Deals
You do not need to be a high-powered stock broker to figure out a good currency to invest in, but it does take some trial and error till you figure out how the whole thing works.
I remember buying a currency just because it is on the low end, but I didn’t realize that it was the low end for the last hour or so and it is in fact very expensive to buy when you look at the price through the day!
That’s a beginner’s mistake and I made it for you, which cost me a lot as well, you’re welcome! Just make sure you learn it.
Make sure you study closely the charts, they are there for a reason and if you are not using the charts to guide your behaviour, then you’re bound to get lost in this whole thing.
Don’t Sell Way Too Early
One mistake that I noticed I was doing is not giving the stock enough time for it to rise significantly. Me being a beginner at this, I was “cashing out” after I made just a few cents when the stock could’ve gone on to make much more.
This was resulting in me investing, losing big (on the bad deals) and leaving 90% of the income on the table for the good deals that I’ve done.
Don’t get too greedy (again) either, make a substantial profit and walk away! No need to push it to the maximum profit possible.
Cut Losses Early
This is a tough pill to swallow but you have to make sure you get this right.
At some point, you will make a bad move and the trade starts going down the toilet. Should you cut it and accept the losses or keep it there and hope and pray that it will go up?
I’ve had this happen to me many times and it’s when I made the most money and when I lost it all as well, so you just have to risk it.
However, if the charts show you that it will only keep going down, then it’s much safer to cut it out and lose a bit instead of losing it all on one tiny mistake (which can happen easily).
It sucks I know, especially if you think that you’ve made the right pick but as you will see from a further lesson, it’s best not to get emotional.
Risk 1% to 2% Of Your Account
Ok, let’s talk some sense into you before you start losing all your child’s college fund.
Whatever money you put in, it could be $100 or $1,000,000 only risk 1% to 2% of your account on each trade.
Don’t go crazy (like me) and put in 40% on 1 trade because “you have a good feeling”. Feelings go out the window when shit gets real in this business.
Yes, big money can be made with bigger risks but trust me; with this approach; you will burn out all your finds in a couple of bad deals in minutes, yes even if you have a $1,000,000!
Don’t Get Emotional
Look, it’s easy to start seeing some money coming in fast, by some luck or some solid strategy and this will ignite a fire in you like no other, but always make sure you stay unattached emotionally to the red and blue colors on your screen.
Just because one currency pair made you money once, twice and even three times in a row doesn’t mean the 4th is a guarantee!
And even if you had a bad deal on a bad pair, do not abandon that pair altogether.
Look, the market is the market and it will be here whether you are or not. Whether you make money or lose money, the market is going to be fine, so please; for the love of yourself and your state of mind; do not get emotionally attached to the process.
This is a business we are trying to build here and ideally we’d want it to be profitable right?
Just keep this in mind.
It’s A Long Term Plan
This is definitely not a get rich quick thing so make sure you have a long-term strategy in place. You are not going to become the next Wolf Of Wall Street in one day.
Invest, take your time, study the market and plan for the future. Just because a currency is going down, it doesn’t mean it will stay down forever.
Ok, one last thing that I want to touch on is to pay close attention to your trades and how they are doing.
Also, pay attention to what you are doing as I have also been guilty of pressing the wrong button (on my smartphone) and making deals that I didn’t want to make.
The FOREX market is fast AF and it takes no prisoners.
Pay close attention to your balance even. You do not want to be leveraged out and lose all your account, do you?
Well, that is how I wiped out my last account because I was sleeping and had lost it all during the night. So does that mean you should not sleep? Obviously not; just pay attention and do not risk too much.
If necessary, adopt the “stop loss” method which you can learn about here to make sure your ass is safe while you are away from your trading screens.
A Quick Recap
Before I close this off, I want to make sure that you have gotten these 9 lessons as I really do think these can make the difference between making some money and losing it all. Let’s take a look at what we’ve just talked about:
- Start with a demo account.
- Do not get greedy.
- Make good deals.
- Don’t sell too early.
- Cut losses early.
- Risk 1% to 2% only.
- Don’t get emotional.
- Look at it as a long-term plan.
- Pay very close attention.
Thank you for reading these experiences that I have had and these lessons that I decided to share to hopefully help you as a beginner trading FOREX.
Again; I would like to stress that I am in now way a FOREX expert. I am just speaking from a beginner’s point of view here and I am sharing my mistakes and what I will do next time to prevent them happening.
Hopefully, this post was useful to you.
If you are looking at FOREX at hopes of finding success online and finally be able to make money outside of the regular 9 to 5 job, then I’d also like you to take a look at affiliate marketing which has been my bread and butter for the last 5 years.
I’ve recently published a post detailing the differences between FOREX and affiliate marketing and I think that post should help you come to a few realizations about both business models and give you some tips along the way.
If you do have any questions about FOREX and / or online business in general, be sure to leave them down in the comment section below or send me a private email.
I am here to help so I’d be more than happy to help you get started!
Until next time, I wish you a happy and productive day, week, year, life!