As we already stressed in our previous articles we at FXUniverse believe that educating yourself is the single most important thing in trading any financial markets and thus forex too. Investing in your knowledge has no substitute and has to potential to turn you into a conscious, objective, knowledgeable, and, of course, highly profitable trader.
Finding relevant resources
With the vast amount of information available, these days both on- and offline the real issue is to filter it and find the valuable sources. We will help you in that with this and our future articles on the different aspects of trading, our and show you the most exciting sources of readily available and mostly free information.
You will only have to find the time to thoroughly go through them and draw the conclusions for your own approach and trading style. As there is no such thing as “the perfect trading strategy” it’s important that you take every bit of knowledge with a grain of salt (even if it comes from us), and not because you don’t trust the author—it’s just that everything means something different to every trader.
Always adapt what you learn to your personality!
What topics to consider?
Currencies are influenced by a lot of different factors from basic economic trends to central bank policies and market sentiment. Getting familiar with all the important parts of the puzzle will help you immensely in understanding underlying trends and also save you from a lot of surprises. We will help you in that by our in-depth articles about the crucial topics and trading strategies. Here is a list of the primary topics to get into:
- Technical Analysis and Charting
- Trend Following Strategies and Mean Reversion Strategies
- Day-trading, Scalping, Swing trading, and Long-term Investing
- Momentum Indicators, Oscillators
- Economic fundamentals, interest rates, monetary policies
- The role of economic news releases
Some of these might seem complex at first but experienced traders know that the bigger the trend is the easier to spot the factor behind it. So keep it simple and try to learn the essence of every topic; use only a few indicators for example or concentrate only on the most important economic measures—always look for the simplest explanation!
Where should you be looking for?
There is no one perfect answer to this question either. Everyone has a different learning process; some prefer reading books or shorter material like blog posts and articles. Others might like videos and webinars more. More advanced traders are likely to effectively learn just by looking at trades of successful traders as they will know what to pay attention to.
Nowadays this is much easier to accomplish than even just a few years ago as a lot of “social” trading platforms emerged recently. Those not only let you follow someone, but also offer great ways of interacting with the best traders. This “coaching” can be invaluable as it comes from real, experienced, and accomplished traders. So to wrap the different sources here is a list of the possibilities:
- Quality Blogs and Articles
- Economic news analysis
- Webinars and live trading videos
- Following successful traders
The myth of the Holy Grail, and other things to avoid
In forex, it is often more important to know what to keep away from with a lot of people trying to exploit newcomer traders on the market. From the obvious scammers to elaborate schemes there are many different levels on which they operate. But using common sense it is relatively easy to spot them.
For example, be aware of those who want to sell the “Strategy That Works Every Time in Every Market Environment” and will do that forever. I can assure you that it’s not real. Most likely the strategy was constructed to be highly profitable with back-testing (this is widely known as curve-fitting), but that doesn’t mean that it will continue to work in the future. In fact, there is a tendency concerning these “fitted” strategies to fail miserably sooner or later.
Also, individuals or companies that seem very eager to teach you or manage your money without a proper background should be suspicious. Think about it if they are so good why do they need aggressive marketing strategies to reach new customers?
Learn from yourself!
We haven’t talked about one of the most important, but often overlooked, source of education, your own trading history. You would be amazed to know how much you can learn from analyzing your trades. Both spotting weaknesses and finding the strengths in your approach is very easy if you are able to objectively evaluate your performance.
In order to do this, you need to keep a comprehensive trading journal containing all the crucial information about your activity, from the used strategies to the times when you trade and what your plan was when you entered the trade. Did you use a stop-loss order? Did you have an exact target price? These are all very useful inputs for hindsight analysis.
With today’s advanced trading platforms, tracking your performance is easier than ever. When you decide on your broker you should consider this aspect as well.
Wrapping it up
Now that you know the basics you are ready to start your journey towards successful and consistent trading. We offer you help along the way so stay tuned for more detailed posts in the mentioned topics. And don’t forget to start trading on a demo account. Although it’s not the same as live trading, it will give you the initial experience without the accompanying risks. You can also start your trading journal and begin evaluating your performance.