DailyFX Forex Trading Course Walkthrough: Part Ten - DailyFX

Posted: 11 Feb 2021 11:05 AM PST

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Forex Trading Course Walkthrough Talking Points:

This is the tenth of a ten-part series in which we walk through articles from DailyFX Education.
The aim of this series is simplicity while walking through some of the more important aspects of the FX market along with traders' strategies and approaches.
If you would like to access the full suite of Educational articles offered by DailyFX Education, you can get started with the beginner section at this link: DailyFX Forex for Beginners

We are now in our final installment.

But, keep those graduation caps on because your trading career is just now getting started and there's much more work to do before celebrations are in order.

Everything that we've learned up to this point is largely mechanical or physical, in some way. But the real challenge in trading, at least for most people, isn't something that can be learned in a book, it's what they have going on between the ears. It's the psychology of the matter.

Point blank: Trading is one of the few venues in life where failure is absolutely guaranteed. You're not going to win 100% of your trades, nor should you try. And as unfortunate as it is, many people in our society have a very difficult time dealing with failure, and perhaps an even more difficult time remaining motivated when they know that failure is not only possible but even probable. This is why trading psychology is so utterly important: Because you can quickly become your own worst enemy. To get started, check out our Guide to Trading Psychology below.

A Guide to Trading Psychology

Greed and fear; they're ever present in our society. But, most of the time most people can put these on the backburner without focusing on it too much. Others, however, aren't so lucky. For traders, this will be a constant in their day-to-day because there's a very frequent oscillation between the two emotions, and rarely does that perfect balance stick around for long without some work or effort on the behalf of the trader.

How to Manage Greed and Fear in Trading

Next up, we look at how traders can move forward with what should be the primary goal of new traders: Consistency. You're going to have a lot of time to work with greed and fear as you manage your own psychology.

These negative emotions can lead to a host of problems. Sometimes, traders will spend time tying to find or hone the 'perfect' strategy. This, of course, is a wasted quest as there is no such thing as perfection when it comes to projecting the future. Instead, this is more of a cop out that allows the prospective trader to waste time while feeling like they're moving in the right direction.

This leads to something known as 'paralysis by analysis,' or, said otherwise, spending so much time analyzing the problem that you forget the best way to go about solving it. It's a pure waste of time and emotional energy because the more time you spend thinking about the future doesn't necessarily help you to navigate it when whatever happens, happens.

Instead, accept that perfection is not only impossible but misleading, and learn how to trade consistently without having the perfect strategy.

How to Trade Consistently Without Having the Perfect Strategy

The last part of our series is, ironically, the point where many educational trading courses will begin and that's setting up a trading plan. The reason we saved this for last is because finishing this material is not an end, in any way: It's the beginning of your trading career. This is when you want to begin to set a trading plan, because you've learned many of the basics and you've been shown some of the most important aspects of market analysis. At this point, you're ready to begin creation of your own unique trading plan.

But, by no means is the quest over and that will likely remain as the case for as long as you're a trader. This is where the demo account can come in, helping you to get more and more comfortable with the mechanics of placing a trade, following a strategy and executing an approach – without having the emotional crux of losing money hanging over your head.

How to Create a Trading Plan in 7 Steps

Real World Application

This is our last lesson in the course so this should also be your first step into your trading career. The application from this lesson is to create your trading plan. You can use the guide linked above to assist; and the details of what we've learned over the prior nine lessons to fill-in for each section. But this is your trading plan so build it based exactly on you and your preferences. Do expect that future changes may be needed, and that's ok, traders often adapt their plans as they progress.

The demo account can be a key resource for your continued learning, as you further build your strategy and approach.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

DailyFX Forex Trading Course Walkthrough: Part One - DailyFX

Posted: 11 Feb 2021 09:15 AM PST

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Forex Trading Course Walkthrough Talking Points:

This is the first of a ten-part series in which we walk through articles from DailyFX Education.
The aim of this series is simplicity while traversing some of the more important aspects of the FX market along with traders' strategies and approaches.
If you would like to access the full suite of educational articles offered by DailyFX, you can get started with the beginner section at this link: DailyFX Forex for Beginners

In many ways, the Forex market is like many other markets: The goal is to buy low, sell high (or for short positions, sell high, cover lower, but we'll get to that later). Let's start learning more about the basics of the Forex market.

What is Forex

Speculators similarly come to the Forex market with the goal of producing profit by a market's movements. And just like stocks or futures, prices move throughout the day and that can allow for profit (or loss), and traders can evaluate numerous opportunities as prices continue to move 24 hours a day, five days a week.

A key point is the fact that currencies are the base of the financial system. So, there's really no other way to value a currency other than by using other currencies. This may sound paradoxical. It's not. It's more relative than anything. If someone asks you what the value of the Euro is – how do you respond? You can't quote the Euro in terms of the Euro, that's an actual paradox. But – you can use the US Dollar, or the Japanese Yen, or the British Pound. And this happens all day, five days a week in currency pairs like EUR/USD, EUR/JPY and EUR/GBP.

How to Read a Currency Pair

Another important nuance of the FX market is in the pricing. For most people, they've probably only seen prices quoted in rational amounts. Like $15.75 or $199.99; you know, Dollars and Cents. Well, in FX the pricing gets far more granular, and prices can be quoted to five places beyond the decimal. EUR/USD, for instance, can be quoted as 1.2135; which is like saying One Dollar, 21 Cents and 35 'pips.' But – what is a pip? This is an important one because it's the base unit of measurement in the FX market. Click the article below to learn more.

What is a Pip?

If you're reading this, you probably wanted to learn about more than just pip values and forex quotes. You're likely looking to work with movements in markets, and this is where analysis can start to come into play, and that's what we do at DailyFX – research and analysis to help our readers and customers of IG to make more informed decisions. But – there's one massive force at the core of most FX movements, and you can learn about that by clicking on the link below:

Interest Rates and the Forex Market

At this point, we've thrown a lot of new concepts and ideas your way. Digest this information the best you can because this is all foundational material that's going to be used throughout your FX trading career.

What could be helpful is learning what type of trader you might be. Of course, this can take some time and experience before you find your best fit. But one tool that may help is what we call our DNA FX Quiz. It's a personality test, basically, after which we recommend a trader 'type' based on the answers you've provided. This is free to take and can be accessed from the link below:

DNA FX Quiz

If you want to take the next step to put these lessons into action – locate the Central Bank rates for the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan. We'll get into more depth in the next lesson as we get deeper involved with drivers behind FX prices.

In trading, like most other fields, experience is very important. The downside of the requirement: losses or mistakes can be very costly, and this can make the barriers to entry even higher for new traders. There is an option to gain experience without financial risk, and that's a demo account. The downside is any gains made would not be real as it is fictional capital. But it does allow a new trader to familiarize with the platform and the market without having to put their hard-earned money on the line. You can open a demo account with our parent company, IG Group, from the link below:

Click here to request a free demo with IG group.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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