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Lesson 5: First steps of novice trader, or discovering Forex

Published 02.09.2014 at 01.03 PM.

How to trade on Forex?” This is the question I was asking a few years ago attracted by exciting prospects promised in a broker’s ad. According to the company’s representatives, to start trading, you should do these simple steps:
Download a platform.
Open an account.
Complete a 2-week educational course.
Deposit funds to the account.
Start trading.

It took me no more than 10 minutes to download and install a trading platform.

Account opening was quite fast too. I had to fill in a registration form, read and agree with the terms, and complete registration. Do not use any aliases like John Smith (unless you are John Smith indeed) when registering because you can run into troubles when withdrawing your funds if you have different ID and residence details.
I ignored the 2-week educational course being sure I can google whatever information I needed anytime. So I jumped to the fourth step and deposited my initial deposit of $100 to the account. Without further delays, I started trading. I decided to grasp the details of platform handling in live trading.

Back then, I traded JPY/USD that was moving in a narrow range of 50 pips and opened my first deals within this channel. On the first day I made $30; on the second, $20… I was already imagining myself as an owner of expensive houses, luxury cars and yachts. I made 50% profit in two days! Bankers seemed second-hand mobile dealers in comparison with me… On the third day, the yen left the channel and me without funds or hopes. I was distressed and dared to continue trading only in several days. But this time, I opened a demo account and did my homework.
Please do not repeat my mistakes and do everything step-by-step instead. Shift to live trading only after you have worked out a profitable strategy on your demo account. Of course, remember to follow the rules of money management.

To avoid falling into the same trap, be sure to follow these steps:
Open a demo account with InstaForex. I’ll touch on why I chose this company in another post.
Download and then study the MT4 function kit:

  • Open a chart of some trading instrument, for example EUR/USD;
  • Open/close deals;
  • Change Take Profit and Stop Loss levels in opened transactions;
  • Put technical analysis tools on the chart: key lines, channels, Fibonacci grid etc.;
  • Set indicators;
  • Launch a trading script/expert advisor.

3.Study general principles of fundamental analysis (you do not have to scrutinize it in every detail) and learn how to use economic calendar.
Study technical analysis.
Learn how to use money management in your strategy.
Use a ready-made trading strategy according to your requirements and time you are ready to devote to trading.
When you have achieved positive results, open a live account. Deposit only the sum you are ready to lose; this will ease psychological tension during opening and holding deals.

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