By Your Trading Mentor
TRADERS DON’T LIVE LONG ENOUGH TO SPEND THEIR MONEY – APPARENTLY
I first started reading about forex trading in 2015 but I had been interested in it since about 2005. I remember when I was at school and was told I needed to think about what I wanted to do with my life I immediately asked the question ‘well, what job pays the best?’. One of my friends who I considered to be a lot smarter than me, told me that forex traders made A LOT of money. So I said ‘that’s settled, I’ll be a forex trader’ but then she told me that they often died early because of the stress. So I weighted it up as an option and decided it probably wasn’t worth making all that money if I wasn’t going to live long enough to spend it, so I ruled forex trading out for the time being and decided to work in radio instead, because it sounded fun.
DECIDING TO SELF TEACH FOREX TRADING
By the time I realised there wasn’t enough money in radio to live comfortably on in the UK, and in particular, in the South East of England in an expensive seaside town called Brighton, most of my twenties had gone by and I was hesitant to start paying lots of money for expensive trading courses or investing in trading mentors if I wasn’t 100% sure it was going to pay off. So I went the half hearted route into forex trading and self taught thinking I was being clever and hedging against the possibility that I might not actually be good enough to make it as a full time trader.
There are elements of this approach which I stand by today as being clever. I didn’t spend a lot of money on my trading education which was a big plus as I didn’t have a lot of money to spend. I decided I wanted to learn how to trade forex because I needed more money so giving over all the money I didn’t have for something that might not work seemed too big a risk.
On the flip side I realise that learning to trade is like most skills in life, the more you practice the better you get and if you can learn from someone else who has been there, you can save yourself a lot of time in the process. I do wish I’d invested in a trading mentor sooner but this is another story for another day.
MY FIRST FOREX TRADE
I remember my first forex trade well, I had no idea what I was doing, I didn’t even understand how the pairs were quoted against each other or that the first pair sets the direction or that I didn’t need to sell a GBP pair first (I thought I did because I live in the UK so I only had pounds and therefore surely I must need to sell a pound pair first to have the other currency, that’s how foreign exchange works right?) So I sold GBPJPY because I wanted to have some Yen so I could trade with them as well. If you have been trading for more than a day you will be laughing at how ridiculous this is, if you are brand new to trading please start laughing because it is ridiculous. Please don’t think this is how you trade forex because IT IS NOT!! I’d had no training on lot sizes or entries or stop losses, I didn’t even know how to close the trade when it was open. The trade went immediately against me which I now know is completely normal as that money is the broker fee called the spread. It’s also normal for the trade to go against you when you have no idea what you are doing and why you entered in the first place, except that you had some strange disillusion you may be the owner of some Yen after placing the trade. I had to call one of my friends who had some basic experience in trading to help me close the trade although to be honest he sounded just as confused as I was and suggested that maybe I didn’t actually own any Yen after all and I could probably trade whatever currencies I wanted. My trade closed at a loss of £2 – which lets be honest, is very lucky considering how clueless I was!
MY FIRST FOREX TRADING STRATEGY
I decided I should finish reading at least one book on forex trading for beginners before I start trading again. I opted for FOREX FOR BEGINNERS by Anna Couling which turned out to be a pretty solid choice and to this day I highly recommend every new trader actually keep a copy of this bible by their trading desk to be able to refer back to it when needed. You can order a copy here if you don’t already own one and thank me later – https://amzn.to/3YZdv5w (I have more book recommendations at the end of this post)
After doing a bit of research I realised that what I needed to be a profitable trader was set of rules and a strategy. Anna Coulling made it very clear that there was a fine line between gambling and profitable trading and the difference was often that gamblers found trading fun whilst professional traders who mad money from it often found it boring as they followed a clear set of rules and tried their best not to get too happy about the wins or too upset about the losses. I decided I wanted to be a bored and rich trader, therefore I needed a clear set of rules.
I’m not sure how I first heard about moving averages, but they seemed pretty popular in the forex trading world so I decided I was to become the master of moving averages. I think I used a 20 period moving average on the 1D chart to start with and every time a forex pair crossed above or below for the first time I decided that was the time to enter. I spent months paper trading this strategy, and on paper it looked like I was definitely going to be a millionaire in no time. As soon as I started live trading this strategy however I encountered some bumps on the road. First of all, this happened far too frequently and I ended up with so many trades open at once and then I had to pick and chose which ones to leave open and which ones to just leave. And as I didn’t actually know what I was doing it was very difficult to justify any decision either way. Also, what I soon learned was that trading on the 1D chart meant that I needed to have a really big stop loss to account for volatility and as I was trading on a £200 trading account I was only able to have a few trades open at once meaning that I ended up missing new entries. And by some completely mystical unexplained reason every trade I took lost and every trade I couldn’t take for lack of margin reasons, would have won. Which led me to the realisation that I needed more than £200 to be a successful forex trader. If only someone had let me know sooner!
SCALING UP MY FOREX TRADING ACCOUNT
I decided that I knew exactly what I was doing, after all my 1D moving average strategy was on point (if you are brand new to forex trading and you can’t detect the sarcasm here please realise I’m making fun of myself for being so basic and please don’t try this at home!!!) And that I needed to come up with a strategy to scale up my forex account so I could trade properly. I made the decision to stop going for nights out in Brighton and instead to use any excess money to top up my forex trading account at the end of each month. You’ll remember that I wasn’t being paid a lot at this time in my life which was the reason I decided I wanted to be a forex trader in the first place so at the end of each month I only really had a spare £200 to put into my account.
MY FIRST PROFITABLE MONTH
I realised early on that I was doing a lot of things right with my trading, as I was making enough wins to feel optimistic and hopeful, and enough loses not to get carried away and think I was good enough to put all my life savings in to my trading account and gamble it away on one big trade. While I made lots of profitable trades, I would still finish each month at a minus for well over a year. It wasn’t until my 18th month trading forex that I actually ended the month in profit. At The time I was on about a £1,000 account (which I now know is very small and difficult to trade effectively on – this is another blog post for another day!!) And I’d made about £200 which is 20% of my account!! I was over the moon. I thought ‘this is it!’ ‘I’ve done it!’ ‘Ive made it!!’ ‘I’m going to be rich now!’ ‘There’s no looking back. If I can make 20% of my account back every month I’ll be unstoppable.’ I did the maths on paper and worked out exactly how long it would take me to build up my forex trading account so I would be a millionaire. I started looking at huge luxury apartments and planning how I was going to decorate them. I researched different loans which I decided would help get me to become a million quicker, because obviously if I was making 20% every month getting a loan would give me leverage.
WHY AREN’T I A MILLIONAIRE YET??
The next month I was in profit again I think but it was a long time ago so I don’t remember every month as clearly as I remember that first “life changing” profitable month. And then I was back to making losses. I had to cancel all the expensive plans I’d made while I was euphoric from making £200 because I realised that it probably was no longer a sure thing.
Overall the process of learning to trade forex took a lot longer than I had expected but I also realise that I went the very very long way around things. I didn’t have the money at the time to invest in a trading mentor but I wish I had at least started talking to other traders sooner as there really is no quicker way to learn then from someone who has already been there. When I started my trading business, Trading Angel in 2019, I wanted it to be the service which I wish I’d had for myself when I first started trading forex. If you are just starting your forex journey and you’re hesitant to invest in a forex mentor, like I was when I first started trading, then my best suggestion is to watch as many YouTube videos as possible and read as many books as possible. This is the probably the least expensive way to learn from other traders. I release new YouTube videos on trading the financial markets very week, you can subscribe to Trading Angel’s channel here:
And here are some books which I highly recommend for new fore traders
FOREX FOR BEGINNERS by Anna Coulling
MARKET WIZARDS by Jack D Schwager
ADVANCED TECHNIQUES IN DAY TRADING by Andrew Aziz
TRADING FOR A LIVING by Dr Alexander Elder
TRADING IN THE ZONE by Mark Douglas
Love from your Trading Mentor x