Many rookie traders make the mistake of believing they can make money quickly.
While it is true that you can make money quickly, this does not guarantee that you will be profitable in the long run.
A typical scenario is that a rookie trader learns a little bit about forex trading, discovers an online technique that claims to produce money quickly, and then gets right into trading because he believes he has enough experience to make millions of dollars.
Unfortunately, once the “honeymoon” phase has passed and the excitement has subsided, this novice trader finds that trading isn’t as simple as he anticipated. The system doesn’t seem to be working like it claimed it would and he has no idea why the market is doing what it’s doing.
The most important thing you can invest in as a forex trader is your TIME!
Every trading day is an opportunity to learn, and if you stop learning, you will never be a truly successful trade
Consider how much time it will take you to learn the fundamentals. Consider how much time it will take you in your daily routine to study charts, news reports, log your trades, and be present in the markets.
This is not a problem for someone who can devote a “full-time” employment mentality to forex trading.
However, if you’re like most people, you probably have a job, schoolwork, tuba lessons, and TikTok dancing sessions, so you can’t devote your entire day to trading. This does not preclude you from trading, but it should provide you with some realistic expectations when deciding your trading strategy.
You probably can’t be a scalper or day trader, but perhaps longer-term trades will suit your schedule better.
Every day, you must devote time to market research. Because news moves the market, it’s critical to consider global economic trends and incorporate them into your daily routine.
5 Things to consider in your market analysis:
1. Forex Market Developments
Look at what the “talk of the town” is in the forex world. See what the analysts are buzzing about and how the currencies reacted.
2. News Releases
Know what news reports are coming out each day and how they affect the markets.
The more important the news report, the more movement you can expect to see in its currency.
3. Market Prices of Other Asset Classes
The price of commodities (like oil) or bonds (like U.S. Treasury yields) can affect the way currencies move so it’s important to find out why these things are rising or falling and keep that in mind when trading currencies.
4. Current Events
Check out many news websites and get to know what is happening across the globe.
Events such as major elections, military conflicts, and political scandals can all affect currency movements or global risk sentiment.
5. Review the Charts
Finally, after going through your daily economic analysis, you have to look at the charts.
Charts will give you insights into key support and resistance levels, trends, and possible price points in which to enter the market.