Trading Forex is Like Learning to Drive!

Filed under: Learn Forex Trading |

Trading the foreign exchange markets is tricky. In fact, in many ways, it is much like learning to drive. In order to be good enough to be able to trade with real money, you should first put yourself through a number of tests. These should include both theoretical tests and a practical test: just like in driving.

 

When you are learning to drive, you must first pass a theory test so that you know all of the rules of the road. This includes reading signs, and also knowing more informal rules such as what to do in case of an emergency, and technical information about the car. When trading forex, you also need to know some theory before starting your practical lesson. For example, you should know what various candlestick formation patterns mean (such as a pin bar, an inside bar, and an engulfing pattern), and what implications they have for the sentiment of the market. Before you start your practical lessons, you should also know about support and resistance lines, moving averages, timeframes, the spread, and stop losses.

 

When learning to drive a car, you will spend hours with an instructor learning the practical elements of driving. Unfortunately, when learning to trade forex, you will probably not have an instructor and you will learn to trade by yourself. However, your practical lessons will come in the form of a demo account, where you will trade without the dangers of losing real money; but in an environment that exactly mirrors what it is like to trade in the real world. If you can do this over a significant period of time and be profitable (i.e. not crash!), then you will probably be ready to trade with real funds. You will not get a license by being profitable on a demo account, but you will get confidence; which is in effect, the trading stripes that you need.

One Response to Trading Forex is Like Learning to Drive!

  1. As a driving instructor I totally agree! I wonder if I will be any good at trading as im an instructor ha ha. Nice site, im new to forex and am just looking for info. Im sure i’ll be back. Keep up the interesting posts.

    Kevin
    June 26, 2012 at 3:01 pm
    Reply

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