Entering the Forex Market: How to Survive the Learning Curve
Forex trading is a journey—and it is one fraught with dangers and perils. Unfortunately, most new traders do not realize this. In fact, many new traders believe that trading is going to be a quick road to unlimited riches, and many even believe they will be able to earn a living trading the forex market after a few weeks or months of practice.
Trading is, in reality, a profession very similar to any other professional field such as architecture, engineering, or medicine. In each of these fields, a person will undergo 3 specific stages of development before he or she is released into the field and become commonly accepted as a professional.
Stage #1: Education
In most professional careers, a person is going to go through a minimum of 4 years of classroom education, and in specialized fields such as law or medicine, it is 6-8 years. Trading is no different. Most new traders are not enthused about the idea of spending several months and years learning how the market functions, but those who do take time to become fully educated concerning the financial asset they want to trade, have a much better chance of making it as a professional trader.
Stage #2: Simulated Training
Once classroom educational requirements are fulfilled, the next step is for a person to enter a period of on-the-job training. In the medical field this is known as residency, and in the legal field it can be referred to as an internship or clerkship. In trading it is known as demo trading. Demo trading involves trading a financial instrument under real market conditions, but with simulated money. Prices are moving at the exact same speed as in the real market, but trades are being placed with fake money. This is similar to a medical student operating on a cadaver. The organs and body parts are real, but there is no real risk of the loss of life as there is with a patient who is alive. Demo trading is the same. There is no risk of the loss of real funds.
Stage #3: Entrance Into The Field As A Professional
After several years of education and simulated training, a professional is finally accepted into the field and recognized among peers as a professional. In trading, the equivalent would be trading a live account and making consistent money. In these other professional fields, it is commonly accepted that it will take several years to be recognized as a professional, and a key element of being recognized as a professional is, of course, to be paid like a professional!
Traders are different, though. They oftentimes believe they can attend a weekend seminar and begin trading for a living on Monday. It just does not work this way. There is no hard, fast rule that describes how quickly a trader can become consistently profitable. There are an endless number of variables and factors that determine that for each person.
Education and Money Management
These are two huge keys to trading success, and if you devote yourself to mastering these two steps, then your probability of success will rise concurrently. Those who are hesitant to spend money on a forex course will surely spend in other ways (ie. Losing real money in a live trading account), and those who disregard proper risk management protocol will likely cut their trading journey short. However, if a trader does get educated and employ very strict risk management parameters, he will keep his trading account alive long enough to survive the inevitable learning curve that every trader goes through.
Written by: Matt
We also suggest this relevant article if you have time: How To Trade Forex With Only $1000?
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Tagged as architecture engineering, cadaver, classroom education, clerkship, demo trading, educational requirements, fake money, financial asset, financial instrument, forex market, medical field, medical student, money prices, new traders, professiona, professional careers, professional field, professional stage, professional trader, stages of development + Categorized as Economy articles, Finance