It’s a natural tendency to be impatient, when you first discover forex trading. You’re in an enthusiastic rush to take on board all the information, whilst your inquisitive nature will encourage you to roll your sleeves up and experiment with many concepts, that are both unique and new to you.
Nothing can prepare you for FX trading, particularly from a retail standpoint; there’s no standard training you can embark on, there’s no university degree titled; “retail FX trading BsC”. There’ll be no graduation ceremony after three years of effort, after which you’re then ready to brave your new world, armed with your new qualification. Unless you’re one of the infinitesimally small percentage of traders, who rolls out of an institutional trading environment (with experience passed on by experts) into retail trading, then becoming a retail trader is an entirely self taught occupation, you will literally learn on the job.
One of the critical mistakes many novice traders make, is crucially underestimating the time it takes to become both proficient and profitable. Obviously everyone’s learning curve varies and you can drastically prune that curve back, dependent on the time you can dedicate towards your new venture and adventure. There are no shortcuts in trading, other than to be completely dedicated to your new found profession, whilst remaining fully invested in your industry education, during your steep learning curve. Some honest, successful retail traders, will testify that it took them months to become familiar with the complete machinations of the industry, before they could then develop any thoughts of creating a long term, profitable, trading strategy and edge.
It’s important that during your fledging trading period you set realistic goals, if you do then the self discipline it could immediately instil, might provide a solid foundation of good trading habits, that remains with you permanently. Setting a realistic target on the horizon, by which time you expect to be profitable, should be one of your first objectives.
Compare it to creating a business plan you might present to a bank, to borrow funds, to set up a new start business. In your various forecasts, your projected balance sheet and profit and loss projections, you’d have a break even figure. The generally accepted break even for new starts is three years, by which time you’d expect your business to be profitable. Naturally, most novice traders wouldn’t want to trade for three years before registering a profit and it must be noted that most businesses have overheads, that prevent their proposition reaching a breakeven point any earlier.
Many new businesses, who don’t have significant overheads, can generate profits immediately, particularly if they’re service sector enterprises. You don’t have overheads as a retail trader, other than investing in a better, faster laptop or personal computer, and perhaps setting up two-three screens to monitor your trading positions with less effort. Your only significant overhead is the salary you intend to generate, as you extract funds from the forex marketplace. Therefore, you should, in theory and in comparison with other new start businesses, be profitable in a much shorter time frame.
Putting in place that target on the horizon, when you envisage you’ll become profitable, immediately encourages patience. You can then begin to patiently build your trading plan around the target. The less pressure you put on yourself to perform, then the less likely you are to make mistakes. You can work on and develop patience through a procedure of disciplines and exercises. For example; you could commit to only risking a small percent of your account per trade, you might develop a trading strategy in which the market comes to you, you might decide not to trade, unless your exact parameters are met. And you might stop trading if an inbuilt circuit breaker is hit.
The circuit breaker would be your code to stop trading if you loose X percent during a day’s sessions; let’s suggest you risk 0.5% per trade, then you’d perhaps consider stopping trading, if you lose 2.5% on any given day. Patience is taught, it’s not a natural trait, it’s also self taught, but unless you develop it then you’ll always be fighting battles, mostly with yourself, not with the market.
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