A common mistake by many new traders is that they think they can make money… fast!
While it’s true you can make money in a short amount of time, it doesn’t mean you will end up profitable in the long run.
A typical scenario is that a new trader reads a little bit about trading forex, finds a system online that claims to make money quickly, and then jumps right into trading because he feels like he’s got enough of a background to make millions of dollars.
Unfortunately, after the “honeymoon” period is over and the excitement settles down, this new trader now realizes that trading isn’t as easy as he thought.
The system doesn’t seem to be working like it claimed it would and he has no idea why the market is doing what it’s doing.
The most important thing you can invest in as a forex trader is your TIME!
Every single trading day is a learning experience and if you stop learning, then you will never become a truly successful trader.
Take into account how much time it will take you to learn the basics. Then consider how much time it will take in your daily routine to read charts, news reports, record your trades, and be in the markets.
For someone who can dedicate a “full-time” job mentality to forex trading, then this is no problem .
However, if you’re like most people, you may have a job, school work, tuba lessons, Crossfit sessions, so you cannot exactly dedicate your entire day to trading.
This doesn’t mean that you can’t trade, but it should give you some realistic expectations when it comes to determining your trading style.
You probably can’t be a scalper or day trader, but maybe longer-term trades will work better for your schedule.
Each day requires your time to analyze the market. Because news makes the market move, it’s important to consider the economic developments going on around the world and to make it part of your daily routine.
1. FX Market Developments
Look at what the “talk of the town” is in the forex world. See what the analysts are buzzing about and how the currencies reacted.
2. News Releases
Know what news reports are coming out each day and how they affect the markets.
The more important the news reports, the more movement you can expect to see in its currency. Make sure you check out our Economic Calendar
3. Market Prices of Other Asset Classes
The price of oil or U.S. Treasury yields can affect the way currencies move so it’s important to find out why these things are rising or falling and keep that in mind when trading currencies.
4. Current Events
Check out many news websites and get to know what is happening across the globe.
Events such as major elections, military conflicts, and political scandals can all affect currency movements or global risk sentiment.
5. Review the Charts
Finally, after going through your daily economic analysis, you have to look at the charts.
Charts will give you insights into key support and resistance levels, trends, and possible price points in which to enter the market.