So, you think you’ve got what it takes to trade forex, eh?
Trading forex has the potential to line your pockets when you come up with a tried and tested system of trading that suits your persona. And you’ll experience a true myriad of emotions, from howling glee to fury, to mind numbing dullness – sometimes all in one day.
So, what’s a typical trading day like? Take a look below:
7.05am – Stumble out of bed and put the kettle on. Slap in some toast and take breakfast to my home office (which happens to be my sofa).
7.25am – Set up my charts for the coming day. You see, forex traders rely almost exclusively on a process called “technical analysis” to trade. These charts tell us what currency pairs are looking ripe for a trade. Think of your charts as your car dashboard – while you rely on looking out of the windshield, you also need to rely on things like the speed indicator to help you to drive safely.
Successful forex trading needs you to be able to identify patterns that tend to happen over and over again – the trick is to find one of these patterns, and then pull the trigger. If you read it right, you’ll more often than not see the trade go your way.
Now I need a good half hour to set the charts up, before the London open. That’s because I’m trading the London market. The great thing about forex trading is that it’s totally global – so anyone can trade any market.
8.00am to 12.00am – I start looking to see what the prices are doing on the 4 hour chart. I notice that EUR/USD (the most heavily traded currency pair) is now sitting at a price point where in recent times it has gone the other way. I lick my lips in anticipation of a profit – but I don’t get too hasty. No, Instead I look at what certain other key “indicators” are telling me.
As a forex trader, you will use certain tools that are known as “indicators” – there are literally hundreds around, but good forex traders use certain combinations of indicators (perhaps 4 or as many as 8 is the norm). These indicators are almost like crystal balls, which tell you what the price may be about to do based on historic movements.
Once you start learning about forex trading in more depth, you’ll find that some indicators are actually freakishly accurate. And perhaps more importantly, some combinations of indicators work so well together that if you practice good risk management, you have a very high chance of making money in the long term.
Bingo! My indicators are all telling me to pull the trigger. This is one of the moments as a forex trader where you feel really alive – bang. Done. I’m in the trade, and I’m not sure whether it’s the exhilaration of what’s just happened or just the coffee kicking in – but I feel alive.
But, the day’s barely half way through — find out what happens with the trade in part 2.