Written by CountingPips.com
You wouldn’t start your own company from scratch without taking advice from others who have taken on similar ventures, so why would you do that with trading? When you make the commitment to begin trading currencies, you are entering a field that requires precise knowledge if you have any chance of success. If you try to go it alone, you will lose your funding before you ever gain a fraction of the knowledge you need.
Looking for a good mentoring program or mentor for Forex trading is a good starting point for beginners. They can teach you to build trading and analytical skills that will help you to become successful. With a good mentor you can learn how to identify a profitable trading opportunity, predict trends, time your entries and plan your exits. These are just a few of the skills you are going to need to learn if you have intentions of making money from trading currencies.
A good mentor is not going to mind starting off by teaching you some basics. This will include how trading works, the different currencies available to trade and which ones are the best for someone like you. There are traders entering the Forex market with all different types of backgrounds and skill levels. You may need a crash course in the currency symbols or what a spot market is. Your mentor should be able to assess which of the basics he or she needs to go over with you before moving on to more complex Forex trading skills.
Once you have a basic knowledge of the currencies, how trading them works and the Forex vocabulary, it is time to move on to the different types of analysis techniques used by Forex traders. To turn a profit you have to understand the difference between technical and fundamental trading and when to use them. Each technique is suited for different market conditions. Your mentor should be able to not only explain what these are, but show you practical examples of when and how to apply them. If a mentor is focusing only on one type of analysis, you are not getting the full picture of how to trade. This is going to cost you as you will not get the most out of your Forex trading.
With analysis comes the skill to read a Forex chart and understand what it is trying to tell you. Your mentor should be able to help you identify candlestick patterns. This will be crucial in allowing you to learn how to predict when a reversal in the currency value is about to take place. This will also involve support and resistance levels and how to plot your own so that you can identify trends in the currency pairs you trade and profit from them.
Once you learn how to read the charts, you are going to have to understand how to apply that knowledge. This is where having a mentor that is available to spend one on one time with you will be invaluable. It is the same concept as when you learned how to drive. You studied the books and learned the answers to the test questions, but it was not until you actually got behind the wheel and applied all of that knowledge in real life scenarios that it made any sense.
Where Will You Find This Perfect Mentor?
Start by asking other successful Forex traders that you know. They may not be willing to take you under their wing, but they could know of someone that will. They have all been exactly where you are now at some point, and understand the importance of having someone to guide you.
The important thing about choosing a mentor is that it is someone you can trust. Not because you will be handing over your Forex fund to them, but because you will be admitting your flaws to them. In order to have a relationship that nurtures you into becoming a good trader, you need to be able to trust your mentor enough tell them about the trials and tribulations you have with trading. That kind of honesty will be the only way that they can assess your skills and techniques accurately and help you figure out what you are doing wrong.
Availability is also critical. Especially in the beginning. If the person you choose is too busy to make time for you, you won’t get any benefit. I am not saying you should be able to call them at 2 A.M. to ask if trading the Yen is a good idea, but they should be able to give you at least 15 to 30 minutes of their time every couple of days. Plus, some of that time should be face to face. A great mentor is going to want to see your progress and look at your trading journal to help you pinpoint your mistakes.
Your mentor should have no problem with pointing out your mistakes. This is not the time when you want someone in your corner sugar coating every move you make. If you want to lose the minimal amount of money possible in your first few months of trading, than find a mentor who isn’t shy about telling you when you are about to make a dumb move, or that you already did. This will help you to remember those mistakes you made, in order to not repeat them.
You have a lot ahead of you to learn. Don’t take the skills needed to be a great trader for granted. Forex trading is an acquired skill that takes months, if not longer, to hone. Admit your shortcomings and find someone to work with that is going to coach you along the way and teach you how to start turning your little pips into big dollars.