Becoming a pro trader is
going to take time and effort on your behalf, and you will probably experience
some ups and downs along the way. However, you should not be discouraged, because
the sooner you accept this reality, the sooner you can get on the path to
becoming a professional currency trader. Now, let’s get cracking…
Step 1: Be honest with
yourself
First off, let me clarify
something; becoming a professional trader is the result of first being a
consistently successful trader and building up your trading account and trading
skills over time. Thus, your aim as you begin your Forex trading journey should
be to FIRST become a consistently successful Forex trader, but that does
not necessarily mean you will become a “professional” or full-time trader right
away. As I mentioned in the opening paragraph, becoming a pro trader is
probably going to take a good deal of time if you are starting from a small
trading account, but that does not mean you can’t make consistent money each
month in the meantime.
Consistently successful
trading and professional trading might sound like the same thing, but they are
not. Your aim should first be set on making consistent money each month
relative to your account size, not on becoming a pro trader right out of the
gate.
You see, if you have a
$1,000 trading account for example, you will not be able to make enough money
each month to live off of, and if you try to trade your $1,000 account like
it’s a bigger account, you’ll end up blowing it out.
So, if you eventually want
to be a full-time professional Forex trader, you have to first aim a little bit
lower; you need to aim to make consistent money each month while simultaneously
implementing effective Forex money management. This is called being honest
with yourself about what is really possible given your current financial
situation, and many traders simply don’t do this.
Step 2: Learn the basics of
Forex trading
Next, if you have fully
accepted that you need to focus on the process of trading rather than the
money, and you know you aren’t going to get rich quick on a small trading
account, you should focus on actually learning to trade.
Now, it might seem obvious
that you should learn the basics first, but most beginning Forex traders simply
have no clue what they are doing as they learn to trade. Many of them ignore
the basics of Forex trading and of learning how to trade; this is a
big mistake because if you really want to become a professional at something
you have to start by understanding and building a foundation on the
introductory concepts. You should first get a solid education in the
foundational concepts of Forex by taking my free beginners Forex course.
After you have done this and you thoroughly understand what the Forex market
is, why it exists, and how to make sense of it, then you should move on to
learning a real-world trading strategy like price action.
I can assure you that if
you take this one extra step of learning the basics before you start buying
trading systems and strategies, it will save you a lot of frustration, time and
money, as well as put you far ahead of most beginning traders who simply
dive-in head first without first building a solid foundation to trade off of.
Step 3: Learning to trade
with an effective strategy
After you have completed
steps 1 and 2, it’s time to learn some real-world trading strategies and really
start getting into the “meat” of Forex trading. Now, there are thousands of
different ways to trade the market out there, but if you want to learn how to
read the raw and natural price dynamics of a market, I suggest you learn to
trade forex price action strategies. By making price action trading
your primary trading strategy, you will develop chart-reading skills that will
last a lifetime and make any other strategy or system you use even more
effective. As you probably know by now, I am a huge proponent of “pure” price
action trading, and I really feel that it’s the best way to trade the Forex
market.
The price action strategies
and methods that I trade with and teach my students have served me well for
many years now, and it’s because there is nothing complicated about them. I
simply use my ability to read and interpret the overall market structure to
find high-probability price action setups, and I watch for these obvious price
action setups forming at key chart levels. Thus, there is no confusion or
uncleanliness to my trading approach; it’s all about taking advantage of
high-probability price action events in the market and knowing how to make
sense of and read the ever-changing market conditions.
Step 4: Create (and use) a Forex
trading plan
Creating a trading plan
around your trading strategy is critical for refining your trading approach and
developing an organized and structured trading routine that will guide you when
you switch to real money trading as well as help you avoid becoming an
emotional trader. Yet, the vast majority of traders never even attempt to
create a trading plan, instead, they think they can just “plan” on the go or that
they are “so good” at trading that they just don’t need a plan. Well, the vast
majority of traders also lose money in the markets…no it’s not a coincidence.
When you actually take the
time to boil down your trading strategy to its core components and create an
effective trading plan out of it, you gain a deeper understanding of your
trading strategy and how to use it. You also create a tangible daily guide for
your Forex trading that will work to keep you objective, on-track, and
disciplined, THIS is the most important reason for creating a good Forex
trading plan.
After first trying to trade
without a trading plan like most traders do, I found that I was straying off
course a lot and starting to just gamble my money in the markets rather than
sticking to my high-probability forex price action trading edge. I
soon realized that it’s one thing to understand your trading strategy in
your mind, but it’s another thing all together to actually execute it with
discipline and consistency in real-time market conditions.
HERE is where a Forex
trading plan comes in. It is a written (or typed) outline of your overall
trading approach, and you have it by your side whenever you are trading. Your
trading plan helps you stay true to your trading strategy and to the principals
that you decided were best to trade with when you created your trading plan and
when you were thus totally objective and unemotional. So, a Forex trading plan
gives you a predefined guide to make your decisions off of while analyzing the
markets, this allows you to make logical and objective trading decisions rather
than the emotional knee-jerk trading decisions that so many traders end up
trading off of. If you don’t know how to make a Forex trading plan you should
read this article: how to make a Forex trading plan.
Oh, and don’t make the
common mistake that many traders make of spending the time to create a trading
plan and then never using it. If you don’t actually use your trading plan it’s
not going to help you (surprise surprise!). Also, you may need to tweak your
trading plan as you progress as a trader; nothing wrong with this, as long as
you are working on your trading plan while you are not in the market and thus
totally objective, you are on the right path.
Step 5: Create (and use) a
Forex trading journal
After you’ve created a
successful Forex trading plan, it’s time to create a Forex trading journal so
that you can track your progress as a trader.
Your trading journal can be
thought of as the “engine” that keeps your trading moving in a disciplined and
organized manner. Here are the main reasons to create and use a Forex
trading journal if you want to become a pro Forex trader:
• Trading journals keep you
disciplined – Whilst creating a trading plan will help you become a
disciplined trader, it can be another thing all together to remain a
disciplined trader. Becoming a disciplined trader means nothing if it all goes
out the window after you hit a few losing trades and start trading emotionally
as a result. A trading journal provides you with a tangible tool that helps you
stay accountable, in essence, you become accountable to your trading journal.
At least that’s how you need to think about it. Your trading journal will be a
direct and in-your-face reflection of your ability as a trader. If your trading
skill is not quite where it should be, you will see this reflected in your
trading journal, if your mindset is not quite where it should be, you’ll see
this reflected in your trading journal as well.
You are creating an
on-going journal of your ability or lack thereof to trade the markets
successfully. The longer you maintain your journal and trade your trading plan
in a disciplined and consistent manner, the more discipline and consistency you
will see in your trading results. Over time, you will begin to think of your
trading journal as a testament to your ability to trade, and you will be PROUD
of it, as you should be. This will work to reinforce your desire to maintain
positive trading habits and to not stray off course into emotional-gambler
trading land.
• You need a track record – You
need a track record if you want anyone to take you seriously as a
professionally trader. If you aretrading Forex with a small account and
hoping to find an investor to fund you, you absolutely have to have a
consistently documented track record that shows 6 months or more of successful
trading, in most legitimate cases that is. Furthermore, even if you aren’t
looking for funding, your track record should be viewed as an integral part of
your overall trading strategy that you passionately love to maintain, if you
think of it like this I promise your trading will improve.
• Trading journals develop
winning trading habits – As I mentioned previously, a trading journal will
work to develop and reinforce positive trading habits. The process and routine
of keeping a running journal of all your trades will work to make trading seem
like more of a business. Since you need to learn that Forex trading is a
business anyways, this is a good way to do that. You will work to
reinforce the benefits of discipline and patience when you keep a trading
journal. Once you see your discipline and patience paying off over a period of
time, you will gain a deeper understanding of why they are important and this
will work to make you ENJOY being a patient and disciplined trader, rather than
wanting to “run and gun” like so many other traders do.
Step 6: Demo trade first
After you’ve completed
steps 1-5 of this series, it’s time to try out your trading strategy, trading
plan, and trading journal in real-time market conditions. The process of demo
trading is a good testing-ground for traders, and it’s essential for working
out the kinks in your trading plan and really forging it into something you can
be confident about when you move on to real-money trading.
Now, let me first say that
there are some obvious psychological differences between demo trading and
live trading, but that doesn’t make the process of demo trading insignificant.
Demo trading is an important step for any trader to take after they master
their trading strategy and develop it into a solid trading plan. It can also be
a tool to use to rehabilitate yourself if you’ve been on a big emotional losing
streak in the markets. So, if you find yourself “out of control” in the
markets, stop real-money trading and go back to demo until you have
successfully regrouped and gained your discipline back.
After you have traded your
demo account with consistent success for a period of 3 to 6 months, you can
then try your hand at real-money trading. However, don’t take demo trading
lightly; you really need to see profitable trading results that were born out
of consistently following your trading plan and updating your journal for 3
months or longer before trading live.
