NEW TO TRADING?

Forex trading, or for that matter trading in general is a very rewarding business. It requires little infrastructure i.e a computer and a stable internet connection is more than enough. You don't need to supervise and compensate a "labor force". You don't have to listen to a rude boss. You're not a tiny part of a huge organization. You in fact make all the money you have to from the comfort of your home which means no early morning traffic jams and more time for yourself and of course for your loved ones. In addition to looking super cool you're guaranteed financial returns better than most professions out there.

Most important of all there is no ceiling on the amount of money that you can make. Bear in mind though that this statement is a double edged sword. I have always felt its the tag line that is responsible for pushing the 5% of wannabe traders to become real traders and is also responsible for the remaining 95% who don't realize their dreams in this business. Look at it from the eyes of a ruthless gambler and you're doomed. Look at it from the eyes of a genuine businessman who understand the fundamental relationship between risk and reward and hard work and remuneration and sky is your limit.

Before you proceed Please understand that this business, like any other requires a lot of hard work and 'figuring out' and IT TAKES TIME. If you're willing to dedicate the next 2-3 years to properly learning the ins and outs of treating trading as a profession nothing can stop you. It will be easier said than done simply because its you against YOURSELF. Its the simple reason why so few will make it.

Knowing your opposition well is half the battle won, and if you're not aware of the massive size of this challenge you won't see the finish line. I know I don't sound too refreshing, but its important for you to see both sides of the coin before you decide to flip it.

The decision to take this up as a serious endeavor is a BIG ONE. Be sure to do justice to it.

STEP 1 - Learn the basics

Start with babypips. It does a wonderful job in equipping you with all the basic knowledge you need, to get started in the world of forex trading. Make sure you understand everything and absolutely EVERYTHING that is contained within the educational material. Do not proceed to step 2 if you still have unanswered questions. (You can google the problematic concepts for further elaborations, or contact me personally and I can help you clarify your queries and questions)

STEP 2 - Register for a trading community

Register at forexfactory forums. You need to be exposed to a community of traders where people from every walk of life with highly variable degrees of experience sit all day long to discuss everything trading related including discussion on brokers, platforms, trading methodologies, etc. To get acquainted with the activities of like minded people and what they are doing for survival are crucial in helping you develop the right mindset and keep you from adopting any unreal expectations and beliefs that can take a lot of time (and material losses) to 'unlearn'.

While Forex Factory is one of the biggest host for such trading communities there are other popular forums you may also want to look at. trade2win is another good choice. The reason I provided the link for Forex Factory first is because this is where I accumulated all my trading knowledge and met friends that were just too good to be true. But as mentioned its not the only resource.

Browse through these forums and get acquainted with the forum layouts and the sections and subsections. Try hitting on threads/topics that seem to catch your attention. Read through and see if they build on any of your prior knowledge that you've gained at babypips and other sources.

STEP 3 - Sign up for a demo account

All brokers offer free demo accounts to help you practice and learn with virtual money before you try your luck with your hard earned cash. Many will offer such accounts for an unlimited period of time. 

Sign up for a demo account at one such broker (usually requires only your e-mail address and other contact details) and download the platform.

Meta trader is amongst the most popular and most user friendly trading platform and is also commonly available at most brokers and readily accepted by traders. You might want to choose a broker that provides you a meta trader 4 i.e mt4 platform. FxPro is one broker that offers free demo accounts including an mt4 platform that you can easily download and use with no costs attached.

STEP 4 - Assimilate the James16 material

Visit the James16 chart thread at forex factory forums. Read through the first 200 pages. Read the first post at least 10 times! And NO! I am not exaggerating or over emphasizing anything. You MUST read through the first post (by James16) at least 10 times before you proceed to read the other 199. Period.

Of course the more you read the better. But after 7 years in existence the thread has grown to an unmanageable size for most. It does not take away the merit of reading as much of the thread as possible though.

This thread specializes in helping people read their charts like a book. You'll be looking at particular candle/bar patterns and noticing how well they predict what price is about to do specially at certain locations.You'll be practicing and placing demo trades on the broker platform you downloaded in step 3. Feel free to experiment with money management and trading ideas. Don't fear blown accounts. Demo accounts ARE meant to be blown up. The idea is to freely practice and learn without hurting your capital in the process.

Best of all, the thread doesn't teach you a mechanical system. The emphasis is not on exact entry and exit methods but on "knowing where price is going" without the use of any mathematical formulas, fancy indicators or commercially available expert advisers. This is the "ART" the title of this blog refers to and I have not seen a single resource anywhere in these 4 years that addresses to this very particular skill as well as the James16 thread does. Once you start to read price and start to understand why price moves the way it does you'll be amazed how many trading systems of your own (sets of entry and exit criterion) you can build around this very valuable knowledge of price action. The james16 thread sure dos touch a great deal on the basics of a 'price action trading system' but it won't exert the rules on you, and you're absolutely free to experiment with various approaches, break the stuff into different molds and mix it with other systems you may have had experience with.

 While the group also runs a paid private forum it is really only a compliment to the thread at forex factory and in no way mandatory to get a good hold on the basic (and even the advanced) material and concepts contained within the thread.

STEP 5 - Work on achieving the right mindset

If you have sincerely and honestly completed the first 4 steps - A BIG CONGRATULATIONS! You have accomplished this business by a good 10%.

Yes you read that right. With all the basic knowledge of the markets and how price works its way on the charts - months of hard work and figuring out the mechanical part of this business was really just 10% of the battle won. The remaining 90% is what we refer to as 'trading psychology'. The science of achieving the correct mindset to succeed. yeah..yeah it looks all philosophical and stuff but it still makes up 90% of your trading results.If this wasn't such a huge proportion of successful trading there is no way the process for succeeding at this would be so long. It expands over years, and it does so not because it takes a long time for you to hunt down a winning trading methodology, heck this could be achieved in weeks! The problem lies in fighting the inner demons. The emotions of anger, frustration, fear, greed, exuberance, triumph, over confidence, you name it! They all fracture your results. The trader executes his mentality first and then the system, and that's why working on your psyche is so very important.

There are various sources of valuable information on adopting a sound mentality and psyche that can lead to a successful trading career and life in general and its anywhere in the range of free to fairly cheap.

I would highly recommend the book "Trading In The Zone" by Mark Douglas. A wonderful book that covers various aspects of a winning psychological approach to trading. There are many other good books and a myriad number of free sources and a simple google search could lead you to information that could easily consume your 2-3 months (probably more) of only reading/watching psychology related stuff.

Now think about it. If 90% of successful trading is psychology and Mark Douglas for one. explains it in probably the best way possible, should it be priced at $32 on Amazon or is a $100,000 price tag  a better match to the relative advantages that this book provides versus the cost?

There is a huge difference between reading something and applying it. You could read all you want on trading psychology yet it will only light the path for you. It won't put you on steroids and you still won't travel at the speed of light to your goals of financial freedom. Don't get me wrong. Step 5 is about getting your hands on trading psychology resources like the one mentioned. The point I am trying to make is that it still is a long long walk and you're bound to digress and maybe even give up like the other 90%+ traders who never make it in the long run if you don't realize and are not ready for the challenges TODAY!

STEP 6 - Follow the James16 minimum requirements stated in the first post of the james16 thread

Its funny how we sometimes know the guys giving us advice know their stuff and listening to them will only be beneficial yet we want to believe we know better. Perhaps its because we think we know ourselves better than the guy giving us advice. I can't generalize this I know and I can tell you I am talking about myself. The other reason I wanted to avoid following these requirments is because clearly it looked far too lengthy and time consuming and I wanted to move forward faster obviously because I was in a hurry to make money. What's more I only ended up spending more time on establishing myself with this route than it would have taken had I followed these guidelines.

Its a not a guess - its based on calculations. I calculated the time I spent digressing from the outline in the first post given out by the big man James16 himself where I was trying out totally different systems or jumping to live trading without proving myself on demo or simply by fidgeting with trading rules all the time. I would have been able to shorten my learning curve by a staggering 2 years (that's like midway of my journey thus far) doing nothing but listening to those who I KNOW know better than me. 

I also know for a fact that the vast majority that will read this article will do so for the heck of it or maybe pick on a few points here and there. I don't have any other idea to get you guys to follow the james16 guidelines aside from just emphasizing on it through words. That's the best I can do besides only hoping that you will take me and these words seriously for your own good.

Follow the minimum requirements and you won't go wrong! Its just as simple as that.

Its a long journey folks and its a matter of time, practice, patience and intensity of determination that will get you across the finish line. Follow these steps as sincerely as you can. Don't keep a stop watch when undergoing these steps. An accountant, engineer, or a doctor sill spend a good 16-20+ years in education and will pay a bucket load of money for it. A new business will often take a looong time before the cash flows become positive and its firmly grounded. Its unfair to be treating "trading" as anything less than a professional skill of a true business.

I can assure you that there is a gain to be had at the end of every pain, and the gain here is one that will help you reap gold for the rest of your life with little to no effort. Believe me, trading is NOT an effort activity - if you're passionate then it merges with your instincts. To allow for this, you'll need to work hard but once achieved...well...its a walk in the park eventually.

I wish you best of luck in all your endeavors.

Ghous.