You’ve got to learn before you can earn in Forex

knowledgeiskey

Newbie
9 0
I received this in an updated email from my EA provider; [link removed], thought it may provide some insight for some beginners (in short be patient):

Learning how to trade currencies requires a stiff learning curve – let us not make any qualms about it. That is, unless, of course if what you want is to simply roll the dice and treat foreign currency trading as a game of chance. If so, then what you need is luck – lots of it – not forex education.

On the other hand, if you are quite serious about carving out a profitable career out of trading currencies, then you better start rolling up your sleeves and prepare to burn the midnight oil because it is going to be a continuing, never ending forex learning journey. There is much new knowledge to acquire and quite a load of experience to gain – not to mention a whole new realm of trading discipline to nurture with every step taken in your new forex trading adventure.

As a foreign currency trader, you will find yourself wearing several hats at the same time.

You will find yourself fitting into the shoes of an economist and analyzing existing or soon to be released economic fundamentals to determine how they may possibly tilt the demand and supply equation of currency pairs, thus setting the tone and direction of their future price movements.

At times, you will find yourself wearing the hat of a technical analyst, analyzing charts, crunching numbers, and sifting through voluminous market data to determine if certain currency pairs are already in overbought or oversold territory; or, to find out if the initial momentum that propelled the price in a particular direction is gaining strength or losing steam.

But let me caution you this early. You should not analyze economic fundamentals and digest technical studies for the purpose of using the results as the basis for setting your entry and exit points for your trades. That would be the biggest mistake you will ever make as a trader. In the first place, it is the common mistake committed by the 90% losing traders in the forex market.

You need to study both the underlying fundamentals and technical indicators of a currency pair not so much as to set up your own trades but more so you can gauge the psychological state of the market. By this, we mean the underlying sentiment that grips the majority of the traders which leads them to trade in unison and push the price in a particular direction. For example, there are instances when the release of some encouraging economic data attracts the ordinary traders to go long on a particular currency pair. However, the other traders who essentially comprise the majority may think the effect is just going to be short lived. Instead of going long, the majority traders will use the opportunity to short all the long positions that enter the market, cutting the rally short and setting up the market for a reversal once all the longs have been exhausted.

So there you have it. If you want to make money in forex trading, you have to go along where the majority goes otherwise they will simply roll over you. This gives you an idea why learning to trade the currencies is not a mere walk in the park. It involves the study not only of the underlying fundamentals and technical factors of a particular currency pair but also of the psychological state underlying that particular market. And, it is definitely not something you can learn overnight!
 
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Wakeupsheep

Junior member
14 2
People want to trade as they think it's a get rich quick scheme and somehow they are smarter than everybody else, a big wake up call awaits, effort is required!
 

tomorton

Legendary member
7,427 999
Knowledge is indeed key - knowledge of what to trade, when, and when to get out. But I don't agree with the emphasis on knowledge here.

A quest for increasingly profitable trading does not translate into a quest for increasing amounts and increasing complexity of knowledge. That does work in the conventional professions and careers but not in trading. In trading, we do indeed need to understand the markets we trade but after a relatively early point, more knowledge doesn't mean more profit, because it doesn't directly mean better trades. We need equal knowledge of how to trade - risk control, money management, position sizing, scaling in/out, pyramiding, when to take profits, dealing with losses, leverage. And these are harder things to learn - they come from doing, not studying - from feeling, not reading.

This is why so many successful highy qualified professionals who turn to trading in later life when they are expert in their present / previous field and have capital plus investment experience behind them, nevertheless fail at trading. You can trade yourself into a better trader, but eventually knowledge acquisition will hold you back.
 
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NVP

Legendary member
36,767 1,880
In what profession or vocation or skill is this not the case guys ?
 

Wakeupsheep

Junior member
14 2
Ok, so here's my personnel blueprint for success, it has served me well and I'm giving it to anybody and all for free...Very simple yet very powerful...

Knowledge- Aquire or gather the available information by using historical data, live practice and notation

Understanding- Processing the information in the mind correctly and making the correct analysis- turn it into a game plan

Action- Apply the information through the opening and closing of positions

Results - The quality of the knowledge and decision making will be manifested through PnL .
 

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