If you’ve ever heard the story of how George Soros made his fortune, you should know the profit potential of trading on the foreign exchange market. In the early 1990’s, on the day that would become known as Black Wednesday, Soros pocketed $1 billion in profits from short-selling the British pound. Ever since that day, he has become known as the best currency speculator in the world, and the man who broke the Bank of England.
Fast-forward to 2018, more and more ordinary people are discovering the opportunities that exist in the foreign exchange market, or forex market for short.
In this article, I will give you an introduction to how you can get started with forex trading, as well as give you some tips on tools you can use to increase your chances of success in the forex market.
How to Trade Forex
From time to time, I still have people ask me if it’s really possible to make money from trading forex. The answer is always the same: “Yes, of course it’s possible! But nobody ever said it’s easy.”
So, there you have it. There are certainly ordinary people just like you and I who are making very good money in the forex market on a consistent basis. However, the truth is that many more people who give forex trading a try, end up failing at it.
You see, just like any other profession, it takes practice to master the art of forex trading. Just like you cannot expect to become a pilot without first going through flight school, new traders need to understand that getting a quality forex trading education is key to succeeding in the forex market.
Reputable educators will teach their students everything they need to know about how to trade forex, before they lose their shirt by making silly beginner mistakes in the market. This includes:
- Fundamental & technical analysis of the forex market
- Learning how to put emotions aside and think rationally under pressure
- Using various tools such as trading plans, journals and checklists
Good Traders Use Checklists
Learning how to make the right decisions when it comes to forex trading is critical in order to succeed. So, what are some of the things we can do when we are trading in the forex market to improve our chances of success? Let’s start by looking at some other professions that also depend on being successful every single day.
Imagine you are taking a flight, going to the hospital to have a surgery performed on you, or perhaps just going to maintain your car. What do all these situations have in common?
The professionals you are dealing with in each scenario all use checklists in their daily work to ensure that all tasks are carried out in accordance with pre-determined procedures and rules, developed over years of trial and error by thousands of people before them.
It may sound boring, but the truth is that checklists can be immensely helpful for forex traders as well, in order to avoid making mistakes. It is simply the best way to ensure you don’t forget anything important when you are in the midst of the fast-moving action of the forex market.
As you are learning about different forex trading strategies, it is extremely important that you write down the specific rules for each strategy and define the type of set-up you would need to see before taking a position in the market. This is where a checklist can be so helpful. It will keep you accountable and ensure that you have checked off every single item on your list before entering an order into the market.
Using checklists can also help you improve your own self-discipline, which is another very important element for forex traders. Basically this is a double win in the way that developing a checklist is an exercise in self-discipline by itself, and the checklist helps you remain disciplined throughout the trading process.
Tools such as checklists and trading plans, as well as a quality forex trading education, are just some of the things that will help you on your journey to become a successful independent forex trader. Remember that the more you study and learn about how the financial markets work, the better equipped you will be to make rational decisions when others panic. As Mr. Soros is living proof of, that is exactly how fortunes are made in the market.