Everybody keep asking questions about How do we start trading forex and can we really make a living trading it . It it never easy and IF you say you can do it with hard work and willing to spend long days on screen, and pick up technical tools plot trendlines and fibos and learn few basic candlesticks and use them all to look out for setups and congratulation to those who have been doing exactly what we need to be a failure.
Making a living out of forex could be the hardest job to do if you are a beginner,coz as a beginner you need to spend time to get use to profile its structure and specially the pair or pairs you want to trade as a beginner as it will put lesser stress and focus can totally be shift when you saw selective and rewarding trading opportunities.
One always thinks is it really possible to make a living trading just one pair and lets say if it is euro and it drives the sentiment and opportunity in euro is always on the cards as dollar index futures rely mostly on euro and us dollar is an international currency used for reserves for global transaction by almost every country.
So, us dollar future can be a premeire choice for investors and speculators and stay with it for atleast six months and just look trade clear swings rejections strong confluences and retests as I always mention in my charts.
But when you are on a role and specially at first phase of forex which is building strategies and understanding the limitations and risks involved, you are bond to show emotions and greed even you had great success in doing what you like and the worst part has not yet experienced and it often happens to almost everyone of us when e have no goals and no experience and we just trade for profits and everything is just buy and sell.
But I trade with plan after few years of failure and that plan includes the following:-
Analyze the risk of trading system
It becomes important for everybody to understand that you analyze the risk of every trade you open and for this you have to be completely aware of the risks involved and type of market you are trading and what is driving the price. Is it news or any unexpected event of riskier assests or price is just moving to catch the stops. It is the first clue when you see stop hunting that strong money is looking for areas to step in and that is why they accumulate price and consume all orders buy and sell and then drive the prices in the direction they want.
Then what things we should do to make a better living trading forex and How much do a currency trader make, so that he or she don’t depend on any other income sources to make a living.
Let me help you with few examples and power of risk management.
I use these techniques after years of research and we can turn a $1000 dollar account to $1 million in span of 10 trades but there is no time limit and it depends on setups and time you are willing to spend to look out for such setups but good option would be look out for couple of pairs and start analyzing daily and h4 time frame for low risk reward opportunity.
I set up a plan in which I use to consider few points that risking 20-30% and look for 10 times reward should always be the good one and right approach to your trading. I know risking 20-30% is way too much for beginner trader but If You look out for lower risk and look to build your account with low equity, then probably it will take years for you to get to the destination. But if you still have a plan of risking the much you can afford and make money equal to your account equity, then it would sound good if you even have 20-30% success rate and no wonder you all have idea of what I am talking about even with this amount of success rate.
Another question might be arising out of mind that how much initial capital do we need to make a decent living or atleast keep us interested that We would make enough if you keep a plan and follow it.
We can make simple things look elastic If we have a plan and starting capital of $1000 is more than sufficient and then you can turn you luck and fortunes to make best use of your skills
Always track three to four pairs in a month that are trending nicely
In order to make a living trading Forex and maintain a balance between winning and loosing trade first thing one need to know is to stop looking for shortcuts or holy grail systems like indicator of Robert that can help you find trends and You can plan your trading based on those mechanical systems. Best thing to tackle any problem is always track couple of pairs that are trending nicely and you can look for low risk entries in those pairs and look to enter in squeeze and then there is big chance to understand PA and make most use of the opportunity provided.
Reason I always track couple-of or maximum of three pairs
in the whole month and look for setups and clear example is the following chart of kiwi dollar where I found no risk opportunity and my target was the trading history level and it was a good 10-12 times reward opportunity and that helps me a lot understanding the Forex not only as a beginner but as a opportunist and rest of the time I keep waiting and tracking but never hurry or rush to a trader ever.
Its not easy for us to look out such big reward opportunities but overhead supply and compression to supply was a big reason for price to fail at the historic level specially when there is new low found and price made and attempt to rejection or new supply level. Look at the chart below for more information.