If you want to be a lawyer, doctor, engineer or skilled worker – to work in any professional capacity – you face several years of education and many years of practice before you become really successful in your profession. Becoming a successful forex trader is not a task easier than either of those professions mentioned above. I would claim it is even more difficult as there is no structured formal education available for retail forex traders. However, just because there is no formal education for it, that doesn’t mean you can’t succeed in forex trading.
To profit in trading, you must make recognize the markets. To recognize the markets, you must first know and recognize yourself. The first step of gaining self-awareness is ensuring that your risk tolerance and capital allocation to forex and trading are not excessive or lacking. This means that you must carefully study and analyze your own financial goals in engaging forex trading. Once you know what you want from trading, you must systematically define a timeframe and a working plan for your trading career.
What constitutes failure, what would be defined as success? What is the timeframe for the trial and error process that will inevitably be an important part of your learning? How much time can you devote to trading? Do you aim at financial independence, or merely aim to generate extra income? These and similar questions must be answered before you can gain the clear vision necessary for a persistent and patient approach to trading. Also, having clear goals will make it easier to abandon the endeavor entirely in case that the risks/return analysis precludes a profitable outcome.
One of the biggest problems that infect many beginning forex traders is not being realistic about how much money they can make given what they have to trade with. The truth of the matter is that if you are effectively managing your risk on every single trade you make, you simply will not “get rich quick” if you don’t have a large amount of money to fund your trading account with. So, practicing effective money management in forex is a necessary component to success in the market and it is what realistic traders do.
One thing you have to do if you want to be a consistently profitable forex trader is master a truly effective forex trading strategy. If you are still trading with indicators or relying on some mechanical piece of trading software, you really need to learn how to trade with simple and clean price action strategies. Financial markets are ultimately represented by price action, so you need to learn to read this price action if you want to trade successfully.