10 TIPS FOR BEGINNERS - HOW TO START AND DEVELOP YOUR FOREX TRADING SKILLS?

Dear Friends and Esteemed New Traders,

I have said this before and I am going to say this again. There is no shortcut to success and if it seems too good to be true, it probably is. In fact it is.

Making money (e.g. online) has always been the interest of everyone, anyone. What more if it can be done in an effortless manner. But the fact is, how many successful people out there that has became successful without putting countless effort to their success? If you read their biography, you know that the figures are probably less than 1%, I mean those who made their fortunes through pure luck and inheritance from their rich fathers and families. The rest like us, we have to work for it. Sounds conservative but that is the fact. No fairy tales here.

If you have the time, kindly browse through my archive and you will see that many tips had been shared since I started this forex venture (as well as this blog) back in 2008. In fact if you google enough, these tips and free lessons are almost everywhere. And yes, you can get it for free. But then, some or probably most still prefer to attend paid classrooms, seminars and training simply to learn from the gurus and those who have vast experience dealing with the market. Fine, if you have the money, of course it is no harm to pay thousands for these classes as long as you are happy with it. I am more than happy if my students are willing to pay me thousands as well. Why not?

But I always asked myself whether the money paid is equivalent to the value that I am offering. Of course you need to compensate me a bit at least for my time and energy, but for sure I will not charge anyone a crazy USD55,000 just to be in my inner circle. Yes, I do not drive a Lamborghini but I have a few decent cars that can take me from point A to point B without any problem. Come on, what makes you think anyone could ever afford to pay that hefty amount just to learn from you. I would rather buy a simple house and turn it into a home-stay with that amount of money. Yes of course you have to charge your students for your time and expertise sharing, but the amount has to be sensible. No harm intended though, just expressing my 2 cents.

Anyway, back to the topic, let me simplify the steps that you have to take if ever you wish to start this venture in the first place. Remember, there are no shortcuts. If you want to play football like Cristiano Ronaldo and earns like Cristiano Ronaldo, you have to at least learn and train like Ronaldo on top of the talent that seems to be a prerequisite. Same thing here. And these tips are mainly from my point of view accordingly to what I have gone through.

So let me put it in point forms for your easier understanding.

1. Objective. Always define your objective. Ask yourself why do you want to trade? For sure the answer is making money. But, there are 2 clusters of traders here that you need to understand from Day 1. Are you a trader? or more to a gambler? If you choose to be a gambler, then you can stop reading and open a live account straightaway, and dump all your money there. Well, maybe you can learn on how to be a wise gambler at least. But seriously I mean it. There is no need to learn further here. Period.

But if you choose to be a trader, you need to learn the steps on how to become a real trader. A real trader in my definition is the one who has the proven entry and exit strategy, prudent risk management and strong trading psychology. Patience and discipline is part of trading psychology that you need to really understand and master.

2. Read. Yes, you must be willing to read. So many claims that they don't have time to read, or maybe reading is not something of their 'thing'. But let me ask you a question. How can you understand the fundamental issues of any of your favorite pair if you refuse to read any news related to them? Oh yeah, of course you can listen too. But trust me, reading is much easier to find since there are more reading materials rather than the one you can listen to. So, please spend some times to read and browse through your favorites news channel and analyst columns. It is worth to pay attention.

3. Analyse. Learn to analyse the charts (technical) as well as the fundamentals. As per my previous post, no doubt analysis is important. In fact, one of the key things that you must really understand is where to locate the support and resistance of the price, the Moving Averages, Fibonacci Levels as well as general trends that drive the daily price actions. It takes time surely for your to understand, but it is well worth it.

4. Account. Especially if you are a real beginner, you must get use to the demo account. This is where you learn and experiment all the technical part of your trading. Once you are ready, then only you should open a real account. One serious advise for you to consider, always open your first live account with minimum investment. In fact nowadays there quite a number of brokers who are giving you free money just by opening an account with them. And one of my trading buddies have turned this USD30 into over USD1000 within few months. Awesome indeed. See, the concept here is really simple. You need to learn to drive a small car before you can even think of driving a Ferrari. When you put little, you got little to lose especially for beginners. First thing first, avoid the get-rich-quick mindset in the first place.

5. Prepare. On top of preparing yourself for the knowledge and skills required to trade profitably, most importantly prepare to lose your money, as well as being wrong with your positions. Yup, nobody wants to lose their money but it is a common advise that you must always invest the money that you are willing to lose. It is part of the process, no trader can skip this. So don't put everything that you have into a single trading account since you will pressure yourself unnecessarily. It is a reverse psychology since those who make a living out of this are those who can consistently take losses from time to time when they are wrong. And trust me, you will get it wrong at times so unless you are prepared for this, your risk of losing your account is very much on the higher probability side.

6. Risk. Understand all the risks associated with forex trading and the true meaning of risk management. Learn how to translate this into your trading positions, sizes and dollar at stake for each and every position that you open. Everything in life has its risk but it is how we learnt to mitigate these risks that matter. The problem is, so many ignore this element and end up crying at the end of the day blaming their gurus as deceivers since they were only told the fairy tale parts of the trading journey.

7. Patience. Always look at the big pictures. Learn to wait and hold your breath as well as your index finger from clicking that buy/sell buttons unless you really know the potential consequences. Adrenaline rush as well as impulsiveness are my biggest enemy even until today. I must always remind myself to stay clam and follow the plan accordingly. This is especially true when I chose to stay out the whole day during the UK Referendum vote counts on last 24th June 2016, when the GBP crosses were dropping for more than 1500 pips on average, especially the GBP/JPY with over 2700 pips on that Friday alone. It was tempting though, but by staying out my account is well protected from the wild volatility for the day.

8. Volatility. If there is one word to describe the forex market from the other markets, this will be the word other than the volumes. As per point #7 above, I must admit that this is the one that can really make or break your account if you are not careful about it. Understand the Random Walk Theory. Though most traders do not buy the idea to this 1973 school of thought, still I find it useful to note that nothing is certain in this life except death. Meaning regardless of how good your analysis or strategies are, you still need to open your mind that anything is possible.

Back in 2009, I lost USD3000 in  a matter 30 seconds when a surprise news hit the wire at 3am local time, causing the market to move over 200 pips on all the USD crosses with all my stop losses hit instantly. I thought it was the broker's manipulation but later realize that there was a vote by the House of the US Representatives on the QE and stimulus plan for the US economy. Lucky I had put stops or else I would lose all my account that night since the follow through was imminent.

9. Psychology. Do not be overconfident as well as lack of confidence. This one is best built through experience as well as learning from others. As a trader, taking risk is just part f the game. Always prepare yourself with surprises. Trading psychology is very much related to the twin forces of fear and greed. These are the real beasts that you need to tame within yourself first before you can start reading the market psychology's in general.

Let's put it this way, nobody is a GOD here. So what I am trying to say is that as long as you are humans, the tendency of being right and wrong is just a matter of chances. You put your verdict accordingly as per your analysis and believe, but no one knows for certain on the potential outcomes, not even Soros or Buffett. So what this has got anything to do with your trading psychology is that when you decide to take a position on the market, a sudden jerk of price either in or against your favor should be handled with a "so what?" attitude. Ask yourself whether 'Am I right?' or 'Am I wrong?' on this one and plan your next course of action accordingly. By having this in your mind, you can then avoid the tendency of being impulsive and changing your thoughts at every tick of the price movement. This in my opinion, will build your long term confidence and crucial so that you would not change your market view every now and then. If the strategy works out well, keep it up. If not, it is probably time to stay out and revise your strategy accordingly.

10. Decisions. Learn how and when to pull the trigger when it matters. This is where patience and discipline play its prime role. Learn to be patience and time your entry well. No one knows for certain when and where is the best price to enter regardless of going short or long. By knowing how to read the chart accordingly, you can pick the best possible price zones for you to trigger your orders. You see this is not only about making the right entries for profitable trades, but most importantly applicable to decisions on when to exit a bad trade. Trust me, this is the hardest thing to do in trading. But this is the key to your survival and account protection. When you are wrong, you have to get out. Of course you may ask what if the market make a U-turn back to my favor? Yes, it may. This is where I emphasize that you need to interpret the chart accordingly. Prior to entry, it is mandatory for you to decide where your exit point is, or better known as stop loss in case the trade goes really bad. Otherwise, margin call (MC) will probably be your best friend. I heard some gurus told their students that MC is ok because you will learn from it. Yes indeed it is ok for an account within the hundreds zone. But for account amounting, say 5k and above, margin call is definitely a big NO NO to me.

Just remember that making and losing money is just part of the process, but survival is a must especially when you start trading big accounts. Anything above USD1000 can be treated as big account already especially if you are using leverage 1:200 and above.

Again, these are just my opinions based on what I have personally experience through from the past years. Of course you can get into more details, but the fundamentals are the same.

Hope this helps. Feel free to drop me an email or you can Whatsapp me @ +6011119627262 if you need further assistance.

Have A Nice Day!

THE IMPORTANCE OF ANALYSIS

Analysis is important prior to any decision making since it will give you consistent view on the action that you are about to make. In terms of trading, this includes the decision either to go long, short or simply to stay aside. Though some claims that analysis is just a self-fulfilling prophecy, still it is vital to ensure that you are systematically taking calculated-risk decisions from time to time. Yes you can rely on those reports by market analysts from many online brokers out there. But wouldn't it be nice to generate and having faith in your own analysis instead? So that if anything happen to your trading positions, you know by heart that you are fully responsible instead of blaming those market analysts who provide opinions that made you clicked the buy instead of sell button.

You will also learn a lot from these self-analysis that makes you become more and more independent each day. After all, this is how you learn on how to ride the profits and cut the losses by understanding the key components in your trading. So instead of taking only 10 pips on every trade, you will understand where to put your reasonable profit targets as well as your stop losses by doing a self-market analysis.

Let's get straight to the points. There are basically 5 things that you need to analyse in particular.

1. TECHNICAL ANALYSIS

This is where all your indicators play its role including the Candlestick chart. You name it. Although indicators will show you the past performance of that particular pair, it does not guarantee the future moves, but it will somehow give you the best probabilities based on previous trending and market movements.

Technical always and will always be my first choice of analysis since market tend to repeat by itself from time to time. Furthermore, most market participants are technicians in general. At certain price levels especially at those key support and resistance areas, bulls and bears are clearly taking turns in determining the market directions, regardless whether short or long term. The thing is, the stronger party always win. Again, though many claims that technical levels are self-fulfilling prophecy, still it is a must for all traders to at least learn and understand a few of these indicators. Otherwise, it would be very hard for you to time your entry and exit especially if you plan to scalp the market.

2. FUNDAMENTAL ANALYSIS

Fundamental relates to the background issues (i.e. mainly geopolitical) with regard to any particular pair that you wish to trade. This relates to that country's fiscal and financial policies, interest rates as well as economic fundamentals. When you do fundamental analysis, you basically compare both countries fundamentals (say US vs Japan) and decide which is stronger than the other based on the current fundamental issues.

I don't want to put all the economic jargon here so my definition is always on the basis to simplify your understanding. The simplest way to do the fundamental analysis is to be aware on the weekly economics calendar (& events) and spend a while reading and understanding the online news (i.e. Bloomberg, Telegraph, Action Forex etc) and updates on daily basis. It is not that difficult after all, in fact simpler than the technical analysis.

Keeping yourself updated is a must so that you have the latest issues in your head prior to making any trade decision afterwards. Nevertheless, always bear in mind that fundamental does not necessarily translate into direct market movement and trending since the basis of bullishness and bearishness of each pairs have many elements that has to be factored in. It is what the market participants are doing that moves the market, not simply the fundamental news.

3. SENTIMENT ANALYSIS

Sentiment Analysis is another unique element of trading that some of my trading colleagues are having difficulties to understand. At times, I am personally bombarded with questions "How do you know?", "How sure are you?", "Where did you get this idea?" etc etc. Of course I would not know for certain. No one does. But don't forget that sentiment is something that you can see with your eyes open as well. How the market reacts and move the price is the one that indicates the real sentiment in the market, especially when a strong trending (i.e. Bullish or Bearish) is currently in place. If I can simplify it further, I would say it is how you feel about the market, without being bias to either bulls or bears.

Sentiments do relate to both technical and fundamental analysis. That is the reason why you need to know both. Why? Because the market is made of people and people act accordingly to their believes. Hence for example if a price is approaching a key resistance level, say at 61.8% Fibonacci level, or triple zeros (e.g. 1.3000) it is not necessary that it will make a u-turn there. You need to blend both technical and fundamental issues since this is the one that generate the current sentiment, or so called market believe at that particular moment of time. So if the sentiment is strong, normally the market break all these supposedly resistance or support level without even looking back. They move together like a herd and conduct stampede from time to time that at times leaving you wondering what is going on.


4. PRICE ACTION (PA) ANALYSIS

Price action is basically a part of technical analysis. It is a direct indication on who is in control at that particular point of time or time frame. Hence, even though you plan to go long based on all your analysis above, it is worth to pay attention to the current price action in order to make the best possible entries.

It is simply done by understanding the Japanese candlestick movement accordingly to your favorite time frame. I used to watch even the 5M (5 minutes) time frame previously but nowadays 15M tend to be my favorite. Of course technically I used all the time frame from 15M above, including the monthly chart as well for my PA analysis. But for scalping and entry purpose, 15M as well as 1HR interval tends to be my most preferred time frame for my intra-day trading decisions.

Learn and understand the various patterns of the shooting stars, dojis, hammers and haramis so that in can be translated into your personal trading signals. These patterns are among the easiest thing to understand so spend some times in learning them. Another thing, you need to watch the price momentum as well since during market trending, sideways and breakout, the price momentum varies from one another. Therefore, as mentioned above, understanding the price action patterns is also vital particularly for your entry and exit timing.

5. SELF ANALYSIS

Believe it or not, this is the mother of all analysis. You know why? Because regardless of what is happening in the market, it will do no harm to your trading account as long as you do nothing. Nevertheless, losing control of yourself due to some personal reasons, fatigue, frustration, tension, or probably work stress will definitely be translated into impulsiveness and poor trading decisions. I must admit that this is the hardest analysis to do in trading.

Hence, I would say that on top of all the analysis that I have outlined above, this one you need to ask yourself since no one else can tell about your state of mind except yourself. How to do this? Check my previous 2 posts and you will find the answer on the RWAPD Method. Again, I must emphasize that this is the hardest analysis to master unless you can be true to yourself, throw your ego away, admit your weaknesses and work to improve them as you move on. Otherwise, you will consistently self-destruct your trading accounts.