I have traded retail forex for more than 6 years. Looking back to the first day I started, I could categorize my experience into 4 stages.
1. Doing the right thing – without knowing it
I remember, the first time ever I pulled up my tradestation – I was overwhelmed by this feeling of knowing there is so much potential profits that I could make in forex market. This period of time was a learning stage for me. It took me 2-3 years to learn the very basics of forex trading.
During this time, I remember vividly that my profits had outweighed my losses. Although, my net profit-and-loss was in black, I have to admit that I didn’t know what I was doing then. It just seems like I was doing the right thing without knowing how and why.
2. Doing the wrong thing – still not knowing what I’m doing
As I was making money, I became bolder. I was experimenting with different trading strategies. During the phase 1, most of my trades were based on reading the price action for hours and anticipate where the market is going. During phase 2 (from my 4th-5th year of trading forex), I changed my trading strategy from reading the price action to analyzing market fundamentals and taking positions based on the outcome of my analysis.
THE RESULTS WERE AWFUL! I started to rake in more losses than profits and my confidence was slowly going down the drain along with my money.
3. Knowing what I’m doing – but I’m still not doing it right
I read a lot. Last year, I stumbled upon this book Japanese Candlestick Charting Techniques by Steve Nison. This is a career saving book! At this point, I have traded retail forex for 5 years but I had never used candlestick charts for reasons unbeknownst to me. Steve Nison’s book elucidates why prices move certain way, bounces back certain levels and how to spot a trend reversal – things that are important in forex trading – that is if you want to make money.
Still, after reading this book and having understood the market better, I have yet been able to turn my improved comprehension of forex market into consistent profits. This is because I had shamefully let me emotions get the better of me. Rather than stick to the original game plan, I exited trades before my limits and entered trades before market got to the entry level. Losses beckoned…
4. Doing it right (finally!) and knowing what I’m doing
Finally, I got it right. Rather than letting fear and greed decide my trade entry and exit points, I analyze the charts objectively, determine my trade setup and stick to the plan.
One lesson that I learned all these times is that making profits in forex market is never easy. Walk away if someone tells you otherwise.
I hope you would enjoy my blog. Good luck trading!!!