Becoming a Forex Day Trader
There is no ceiling to the money you can make with Forex. $1000 can become $0 or $3000 in seconds.
If you’ve ever exchanged your country’s currency for another country’s currency, you’re a Forex Trader.
I monitor fluctuations in exchange rates between the world’s currencies everyday and look for patterns. These patterns, coupled with an educated second sense, reveal opportunities to earn money through the exchange of one currency for another.
Most people lose their hats in the forex market (90% or more), and forex brokers are willing to lend you money and charge you commissions while you do so.
I am one of the forex traders that hasn’t lost his hat. I’ve lost some spare change, but in doing so I’ve also developed my own trading style that makes me a few hundred dollars each day.
I’m going to layout my journey from forex noob to forex professional.
“It can’t be that easy”
That’s what I thought when I saw screenshots of exorbitant profits, pictures of exotic cars and luxurious views. The education companies in this industry advertise quick and easy money — “thousands at your fingertips”
I smelled “scam”, believing that most of them made their money on sign-ups, not on the market. I signed up with one of them anyway, and that was my first correct step.
I watched some professional traders draw things on charts. I learned about:
- Support and resistance lines
- Trend lines
- Fibonacci retracements
- Market structure (identifying highs and lows)
This merely exposed me to the language of forex. Perhaps the most beneficial part of joining this trade group was associating with other forex traders. We had a Facebook group where we could ask questions and encourage each other.
Some people start here and then give up here, but it’s just because they’ve barely scratched the surface of the knowledge they need to profit consistently.
Books, books, books
There’s no replacement for diving into books. I DID NOT make money trading until I read at least 5 forex books.
Here are the ones I would recommend all beginners read:
- The Black Book of Forex Trading
- Forex for Beginners
- Trading in the Zone
- Naked Forex
- A Three Dimensional Approach to Forex Trading
Trading in the Zone was the single most influential forex book I have read. I attribute most of my success to that book alone.
My personal favorite author is Anna Coulling. She wrote #3. I find her writing to be very intuitive and easy to digest.
She uses Volume Price Analysis (VPA), a strategy I have implemented in my own unique trading style. If you like her beginner book, then also read A Complete Guide to Volume Price Analysis.
Since there are so many different trading strategies out there, you can get caught in analysis paralysis. You need to keep moving.
While you gather information, picking and choosing your own trading methods, it can be tricky to determine what’s working and what’s not. That’s where “back-testing", patience, and consistency come into play.
Pick a method, back-test it, use it for awhile, and then decide if you will use it going forward. Don’t give up on a method just because it didn’t work the first time. Trading is a probability and numbers game, as you’ll learn in Trading in the Zone.
Risk Managment and Psychology
Two of the biggest mistakes new traders make:
- They don’t use proper risk management
- They haven’t mastered their own mind
Risk 5% of your account or less on all trades. Wealth is built slowly. You can never be 100% sure of the future direction of the market, so you should always make room for and expect losses.
Trading requires a completely new set of psychological tools — tools different than those we are brought up with. You have to be rational and emotionless in the face of loss, and you have to view your trade objectively, avoiding conformation bias.
Developing My Style
Your style should match your personality.
I gather information and make decisions based on that information quickly. I also dislike waiting for a long time to collect my profits…so I’m a scalper. I take short trades (1 minute to 1 hour usually).
Most of my trading friends hold their trades for longer than I do, but that works fine for them.
When I start my trading sessions, I start by analyzing the dollar index (DXY) on the weekly and daily timeframes. I establish a bias (bullish or bearish) and then carry that analysis in to my analysis of other USD based pairs. I markup the charts from these larger timeframes down to the smaller timeframes. Once I find my ideal trading setup (I like to catch retracements of strong movements upward or downward), I switch to my 5 minute and 1 minute charts to execute the trade.
This process is a recipe for me now; it simply works. I’m always learning more, but I’ve found my method.
Now all I have to do is build up my account, bit by bit, letting it compound on itself.
Where to go now
I hope this gave you some good direction.
I am a trader and an educator. I am in the process of developing my own material to turn forex noobs to Forex experts. Meanwhile, I point beginners in the right direction.
Reach out to me if you have questions. I’m here to help.
You can find me on:
Facebook: Bryce Young - Entrepreneur
Websites: younginvesting.net, bryceyoung.me
Good luck and happy trading!