I have a real passion for trading in the money markets. The flashing screens, the changing candlesticks, the potential of huge financial profits - it couldn't be better! When I started out I really believed all this, and spent hundreds of dollars on new systems in an attempt to fulfill my dream.
Hindsight, as they say, is a wonderful thing, and with the benefit of time I can look back on my flirtations with Forex trading and I can reflect on what I would do if I could repeat the whole experience again.
Before committing to any trades I would ask myself three key questions:
1. How much time can I regularly put into trading?
Watching the Forex markets can be very time consuming. If day trading, I would need to be certain that I could be at my screens for the duration of peak trading times. For UK markets this would mean between 6.30am and 10.00am, and again between 2.00pm and 4.00pm. Watching the trading screens can be quite tedious, and a certain amount of self-discipline is required.
If trading longer-term markets (i.e. not day trading) then less time is required as trades are opened and then left for a more prolonged period of time. This type of trading is more suitable for potential traders with less free time on their hands.
2. How much stake money can I start with?
The amount of money put up front will obviously affect the potential for decent profits and the possibility of making a living from Forex trading. For example, I have invested in certain systems that clearly promised weekly incomes in excess of $750. However, what wasn't made clear was the fact that a starting balance of $10,000 would be required!
Other systems have started with very small amounts (between $100 and $500), and through the power of re-investing and compounding have built up relatively quickly to quite sizable balances.
If slightly more money is available, then considerable gains can be predicted. I have quoted elsewhere that if I could start with a budget of $2,000, and if I could regularly make on average 3 pips a day, then in two years I would have a running balance in excess of $90,000!
3. Can I cope with the emotional side?
Many books have been written about the psychology of trading, and it should never be under-estimated. Emotions can make or break traders. Consecutive winning trades can be really exhilarating, but several losses in a row can be equally devastating.
When losses occur there is a risk of revenge trading, and the desire to make up for lost money can be very strong. It can take a lot of will-power to exit a losing trade, turn off the screens, and walk away. You always believe that the next trade will be the big one.
To be successful in trading requires enormous self-discipline, and an ability to view the money markets as long-term sources of income and not short-term gains.
Will I go back to trading the money markets again? Undoubtedly the answer must be yes. I have a real passion for trading, and one day I will return. However, in light of my questions above, I know what the conditions will be.
1. A consistent trading effort during the peak trading times.
2. A bank of no less than $2000 to begin with.
3. A determination to stick with a trading system, have a long term view, and avoid any temptation to tweak or break the rules.
By clear application of these three conditions I know that there are profits to be made - and trading can also be a lot of fun! Give it a go, but be careful out there!
Hindsight, as they say, is a wonderful thing, and with the benefit of time I can look back on my flirtations with Forex trading and I can reflect on what I would do if I could repeat the whole experience again.
Before committing to any trades I would ask myself three key questions:
1. How much time can I regularly put into trading?
Watching the Forex markets can be very time consuming. If day trading, I would need to be certain that I could be at my screens for the duration of peak trading times. For UK markets this would mean between 6.30am and 10.00am, and again between 2.00pm and 4.00pm. Watching the trading screens can be quite tedious, and a certain amount of self-discipline is required.
If trading longer-term markets (i.e. not day trading) then less time is required as trades are opened and then left for a more prolonged period of time. This type of trading is more suitable for potential traders with less free time on their hands.
2. How much stake money can I start with?
The amount of money put up front will obviously affect the potential for decent profits and the possibility of making a living from Forex trading. For example, I have invested in certain systems that clearly promised weekly incomes in excess of $750. However, what wasn't made clear was the fact that a starting balance of $10,000 would be required!
Other systems have started with very small amounts (between $100 and $500), and through the power of re-investing and compounding have built up relatively quickly to quite sizable balances.
If slightly more money is available, then considerable gains can be predicted. I have quoted elsewhere that if I could start with a budget of $2,000, and if I could regularly make on average 3 pips a day, then in two years I would have a running balance in excess of $90,000!
3. Can I cope with the emotional side?
Many books have been written about the psychology of trading, and it should never be under-estimated. Emotions can make or break traders. Consecutive winning trades can be really exhilarating, but several losses in a row can be equally devastating.
When losses occur there is a risk of revenge trading, and the desire to make up for lost money can be very strong. It can take a lot of will-power to exit a losing trade, turn off the screens, and walk away. You always believe that the next trade will be the big one.
To be successful in trading requires enormous self-discipline, and an ability to view the money markets as long-term sources of income and not short-term gains.
Will I go back to trading the money markets again? Undoubtedly the answer must be yes. I have a real passion for trading, and one day I will return. However, in light of my questions above, I know what the conditions will be.
1. A consistent trading effort during the peak trading times.
2. A bank of no less than $2000 to begin with.
3. A determination to stick with a trading system, have a long term view, and avoid any temptation to tweak or break the rules.
By clear application of these three conditions I know that there are profits to be made - and trading can also be a lot of fun! Give it a go, but be careful out there!
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