It Starts In Your Mind

By: Steve Welker

For many people the difficult part of becoming a FOREX trader is initially getting started. It is something new and can be intimidating or even frightening. This article will be the first in a series aimed at helping you make the first steps to becoming a successful trader.
You will need to get yourself in to the proper frame of mind before you start. This is not a "Get Rich Quick" scheme despite all the hype that is floating around. You will not start with a mini account and make $50,000 in your first week of trading.

To be successful as a trader you will need to treat your trading like a small business. You need to have a plan and budget and that plan should include time-spent educating yourself about the market. If you want to make money with your trades you can expect to spend a lot of time learning in the beginning.

There are several different types of orders that you can use to open and close your trades; you will need to become familiar with them. You will need to learn to perform analysis and what type of analysis to use when. You will need to learn to read and understand various charts that will help you decide what currencies to trade when and at what prices.

There are a lot of news stories that can affect the price of a currency. You will have to know where you can find this news and how to interpret it and what effect it is likely to have on the market.

All brokers use software to perform the actual execution of your trades. You will need to become familiar with the software and comfortable using it. You will have to pick a good broker that has the services available to suit your trading style.

The most critical thing is that you will have to learn patience and discipline to become profitable in a timely manner with out losing money on your trades during the learning curve. The most important thing you can do to avoid costly learning mistakes is to spend significant time paper trading.

What is paper trading? Paper trading is a term used to describe opening pretend trades without any money. The term originates from the stock market where people would write on paper the trade they wanted and then watch the market and see how they would have done if they had actually executed the trade. This is the best way to learn the markets without risking any money.

Today almost all of your brokers have demo accounts that you can use for practicing. A demo account will act exactly like a real account except the money in the account is not real. This has the added benefit of using the same software that you will use with a real account. So not only do you learn how the market behaves you also get a chance to become familiar with the system you will be using. You should paper trade until you are turning a profit on a regular basis before you risk your money with real trades.

If you believe that you have the right mind-set to become a trader the next step is to select a broker and open an account. We will discuss this in the next installment.

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