One of the commonly-asked questions today is whether forex trading is easy or challenging. The answer is evident to me.
Is forex trading Easy? Forex trading is very easy if you:-
- Analyze the market and watch the S/R levels.
- Checked out the fundamental analysis and watched the news.
- Trade with a workable strategy and proper money management to gain profits and minimize losses.
Forex trading is easy if you followed that simple formula.
Forex trading is not any different in terms of difficulty-levels than trading in other markets or even a new business you are planning to enter.
Just like any other financial activity, Forex trading has its own unique set of challenges. This means that beginners should be aware of the currency pair behavior, conditions, and risks associated with forex trading before they start to trade.
Similar to other kinds of business out there, Forex trading might seem complicated and intimidating for newbies. However, once you understand how it works, it will be simple and easy for you.
To be successful in any sector and especially Forex Trading, you have to master these 4 things.
- You are dedicating time and effort to your trading routine.
- Setting your mindset and how serious are you to adopt your new lifestyle
- The amount of effort you are will put on the table to learn and master your trading strategy
- lots of practicing until you master the technique.
In the past, Forex trading was exclusive for prominent marketers and wealthy people only. But today, whoever has an internet connection can start trading forex right away. In spite, this sounds to be a piece of good news, but it is not, as there is a lot of hype out there, and unfortunately, most of them are not accurate.
As a beginner to the industry, it is vital to use accurate information and to know where to get it. Besides, it is crucial to understand that not everyone will win and make money from forex trading.
How to Get Started in Forex Trading?
While the forex market can get complicated and may need a lot of research to understand how it works, getting started is relatively simple. You can get a demo account from any broker out there in the market.
After setting up the account, you can now.
- Access live price action,
- Placing entry orders (Buy and sell orders to check out the speed of excursion) orders.
- Trying your trading strategy and see how it works in the market.
It is worthy to note that currencies are traded in pairs, meaning that every time you buy a currency, you are selling another currency. There are several currency pairs available for traders, including major currencies, plus some less-well-known (minor) currencies.
Practice Practice Practice
If it were up to me, I would suggest practicing for at least two months with a demo account before shifting to a real account.
As much as learning about forex trading is essential, putting what you’ve learned into practice is also necessary.
Almost all forex brokers provide a free demo trading account. Here, you can judge your skills using real trading conditions without the risk of losing money.
Practicing different trading styles with Demo accounts.
Different traders apply different strategies, putting in mind what is working for them mentally and what is matching their lifestyle. Mainly the strategies are based on the duration and how long the trades are open.
- Day traders engage in short time frames, (Ranging from 15Mins, 1H and 4h Charts to conclude their trade)
- Swing traders usually trade according to market tendencies, (Ranging from 1H, 4H and Daily Charts to conclude their trade)
- Position traders typically trade higher time frames (Ranging from Daily, Weekly and Monthly Charts to conclude their trade)
Note that position and swing traders do not focus on lower time frames; they only focus on higher time frames (from 4H ++).
Besides, swing and position traders trade with low leverage, because they are trading on higher time frames, their stop loss is far from the trade entry, which minimizes their pip value. (More about pip value on money management)
One of the reasons why lots of people have welcomed forex trading is its automation features. In many trading platforms, trades can be initiated automatically when a particular market or price condition takes place.
P.S. Still, automated forex trading requires that the trader be familiar with the platform’s strategies and features.
How to succeed in Trading Forex?
The first and most crucial aspect of succeeding in the forex market is understanding the financial markets. This means that you have to learn the fundamental aspects of the market.
The majority of traders fail because they only focus on the basics rather than a more in-depth analysis. Unfortunately, they have this belief that a basic understanding is all that they need to trade.
The next factor that will contribute significantly to your success is designing a trading plan.
The Risks Associated with Forex Trading
Forex trading indeed involves some level of risk, and every potential trader should be aware of this aspect before diving in.
Forex trading takes place among large financial institutions and banks. To be fair, these major financial players own more information and technological resources as compared to individual traders like us. This is why retail forex traders find themselves working under market movements that they have minimal or no control over.
Why Do Most Forex Traders Fail?
The majority of forex traders fail because they enter forex trading with the mentality of the get-rich-quick scheme. When this element of greed is introduced into the equation, the much-needed concepts of dedication, learning, and practice are thrown out of the window. Here are other reasons why the majority of forex traders fail:
- Thinking that purchasing a trading system is sufficient to bring in tons of money, which sadly is not the case.
- Lots of traders come into trade with unrealistic expectations. (most of the traders target 20% returns or even higher. In most cases, this is impossible in financial cases)
So, back to the question regarding the ease of forex trading, it is fair to say that the answer is both. Forex trading can overwhelm you if your sole goal is to earn fast money, or in other words, if you treat it as a means to get some quick cash. If you have this mindset, chances are you are setting yourself up to fail before you even start trading.
Having said that, we can all agree that forex trading ranks as a highly-accessible and fast-moving market that has lots of potential for success as losses, even for newbie traders.
As long as you are ready and able to dedicate both effort and time into learning and practicing, then forex trading will be easy for you. Depending on individual cases, being consistently successful and perfecting forex trading can take time, even years.
Nevertheless, whatever you do, keep in mind that the forex trade involves a considerable amount of risk. It doesn’t matter how skilled you are or your level of expertise; the risk is something that you will always have to battle with. Part of the forex trading experience involves taking losses, but the secret is to make sure that what you lose is significantly less than what you win.