Can I Start Trading Forex Right Away?
Can I Start Right Away?
Well – no. Or rather yes, but you should use a demo account in the beginning.
When you sign up for a trading account, be sure to choose one that gives you a demonstration mode so that you can hone your trading skills before you go live with real money. Then use it.
Some sources recommend trading with a demo account for 6 months before you start for real. But there is a big difference between trading every day for 6 months and trading once a week for 6 months. In my view the important thing that you need to learn with a demo account is how to stick to a system consistently, including managing losses. This is something no book or mentor can teach you. You can only learn by doing it for yourself.
When you are able to stick to your system no matter what, and it is proving profitable, and (this is very important) you have had some major losses without reacting by altering your position size, your stops or your system, then you may be ready to move to real money trading. But not before.
Remember, all traders lose money on some trades. Nobody has a 100% success rate. Even the most successful traders have times (sometimes long periods) where nothing seems to go right. If you cannot stand to lose, and get depressed or panicky when it happens, then you probably should not be trading.
Added to that, most traders see all of their first account balance wiped out pretty soon, and either quit or start over. They either started with a system they had not adequately tested, or they did not understand how to manage their funds, stops and position size, or they did not apply their plan consistently, or some combination of all three. Maybe these are just lessons that have to be learned by losing cold hard cash – but if you can avoid a wipe-out by spending a little more time in demo mode, it’s better, isn’t it?
So that is why it is important that you can afford to lose the money that you use for trading.
Let’s be very clear about this. Forex trading is not a get rich scheme. It is not for people who are on welfare, in debt, or struggling to make the mortgage or rent payments. If that sounds hard, I am sorry, but it is true.
The fact is that if you are in any of those situations, you are not going to be relaxed enough about money to make good trading decisions. You will be driven by need, desire and fear, and that is a recipe for disaster. Be grateful that you came across this book before you lost a lot of money and go find a more reliable way of adding to your income.
If, on the other hand, you have enough money for all your needs plus some, you are a good money manager and have self discipline, and you are thinking that maybe instead of spending a few thousand on another car or another vacation you will put that money into forex trading, that’s fine. You should still practice with a demo account until you are confident and profitable, but you are in a much better position to eventually become a successful forex trader.
Good traders can and do make money. Some make enough to live on; some make more than enough. But it is a skill that you need to learn and you will not start making a lot of money in a very short time.