Daily Forex #59 - 3 Things I Wish I Knew When I Started Forex 13 Years Ago
A few weeks ago I shared about how I accidentally stumbled on Forex and made a career out of it. To read that blog post, you can go HERE.
Yesterday, (<-- Click this link to read yesterday's story) I shared about how important it was to trade with a Millionaire Mindset.
Today I want to share 3 things which I wish I knew when I started trading Forex 13 years ago.
- Forex is NOT a Get Rich Quick Scheme
A lot of people and traders have been led to believe that Forex is a way to make fast money. I was the same when I started, making a $20,000 profit in a span of 3 months. It was pure luck that I was able to do it and I lost all my profits in just 1 trade.
Forex trading should be treated the same like all other financial instruments or investments where the goal is to make a consistent profit in the long run. Let's say you want to make $1million. Working in a job that pays you 2,500 a month would take you about 30 years. So, it is a realistic target. The problem arises when someone wants to make the 1million in 3 months instead. The is an unrealistic timeframe.
However, if you target to make $5,000 profits a month, you will make 1million in about 15 years. If you have a full time job, this means you could have a nice retirement fund from trading Forex.
- Never trade on the small time frames
When I started trading Forex, I was looking at the M5 & M15 timeframes. There were plenty of opportunities to enter a trade every single day. Who are the people trading on these timeframes? The majority of retail traders like you and me.
Who are the people losing money? Again, majority of retail traders like you and me. Then the question is how are the profitable traders or banks making money from the Forex market? Simple, they ignore these timeframes and base all their analysis on the higher timeframes, D1 and above.
- Never risk all your money in 1 trade
Although this sounds like the obvious thing to do, not many traders know how to put it into practise. Most of the successful and profitable traders risk a maximum of 1-2% of their account per trade. What this means is that if they have a $100,000 account, they risk a maximum of 2,000 in 1 trade. Their maximum loss per trade is capped at 2,000.
If you have a $1,000 account, what should your maximum lost be? 20! Not more than that. If you keep to this risk management, it would be very difficult for you to blow your account. Yes, the returns might be little as well, but please read my post yesterday on Trading With The Millionaire Mindset.
Here's today's quote of the day from H. G. Wells.
"If you fell down yesterday, stand up today."
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Here are some interesting topics to start you off :
- Daily Forex #52 - The Day I Made £3,000 In 2 hours!
- Daily Forex #20 - Can You Really Make Money Trading Forex?
- Daily Forex #13 - Make Your First $100,000 Trading Forex
- Daily Forex #50 - I Got CHEATED By My Broker Part 1
- Daily Forex #9 - 2 Main Reasons Traders Fail
- Daily Forex #45 - Generating A Basic Salary From Forex Every Month!
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You can find yesterday's post HERE!
These tips are so true. I wish I knew that when I was just a newbie because I was trading on the small time frames, and of course, I was losing money. I don't know how, but once i started trading on https://www.dailyforexjournal.com/, I figured out a pretty good trading strategy and started making money.