Getting started with new things is often the hardest step, and it is no different when it comes to trading and forex. People can sometimes find it hard to actually place that first trade or to deposit that first bit of money. There are be a number of different things that are stopping you from starting, from your anxiety, to simply not liking the risks that are involved. We are going to be looking at some of the reasons why people are afraid of starting the whole trading process. We will also look at some of the things that you can do to try and get that jump-start and to actually start trading.
Jump In
Honestly, it may not sound like the most helpful advice, but sometimes you just need to just jump in with both feet. This doesn’t mean be reckless. Don’t jump in and throw your money about, simply get that first trade placed. Yes, you will need to do some learning beforehand, or analyze the markets for potential trades, but getting that first trade out the way will seriously help with your anxiety about placing those trades. It will also give you an idea and feel of what it is that you are doing and how it actually works first hand rather than just from what you have previously read about.
Use A Demo Account
One way of getting around the fear of putting on some trades is to practice doing it. You can do this on a demo account. The majority of brokers will have this service available to you, all you need to do is to sign up for the demo account. These accounts often have the same features and trading conditions the live accounts so they are perfect for testing out your strategies and just simply getting used to trading. Do not worry about using the demo account for an extended period of time. Use it until you are ready to go live. This could be a week, a month, or even a year for some people, but use it to get used to it until you are confident about how things work and that your strategy is effective.
Use Money You Can Afford to Lose
As with anything when it comes to money, you should only use money that you can afford to lose. What this means is that you need to imagine that any money that you put into the account is automatically lost, imagine that you will never see that money again. How Does this make you feel? If you are just a little annoyed then that is fine, but if you are now worried about being able to pay the rest, or that you are going to have to cut back on things then you should not be trading with this money. If losing it will affect your life, then you need to avoid trading with it at all costs. Only use what you can afford to lose, that is a saying that will be around for as long as money exists.
It’s Complicated, But Not Too Complicated
Trading can be complicated. There is a lot to learn and it can be incredibly overwhelming. In fact, we were in the exact same position at the start of our trading careers. There’s so much info out there that it can make you want to simply give up as it can confuse you as to what it is that you actually need to do. Do not worry if you are in this same situation. Take your time. There is no time limit on how quickly you need to learn things. In fact, you can take as long as you need. Go over one subject at a time, learn what there is to know about it, and then move on to the next. As you begin to learn more and more it will all begin to fall into place and it will start to make sense for you. Of course, there is still a lot to learn, and it is still complicated, but it will start to become clear the more you learn, and the more you begin to understand it.
Too Much Risk Is Involved
For many people, risk is a voodoo word. It is something they do not want to think about and something that they would want to avoid. This is perfectly understandable. Afterall, with risk can come loss, however on the other side, with risk can come rewards. That is why we set up strict risk management plans. These plans outline what we will trade when we will trade it, and how much we will trade. It also tells us the maximum loss that we can have with each trade. If you are worried about putting your money at risk, know that you’ll have these plans in place which will prevent you from losing everything at once. In fact, you can set it up so that you only need to win 25% to 30% of your trades in order to be profitable. This is all done through your risk to reward ratio, which is part of your risk management plan. Ensure that you have this in place before you start trading and you will be in a good position.
Plan Your Trades – Plan Your Losses
Fear and being afraid of something is all about your anticipation that something will go wrong or that something bad is going to happen. In the case of Forex trading, this is often the fact that you can lose some of your money. What we need to do is to plan for these losses. It sounds strange saying that we are going to plan for them, as if we want them. Of course, we don’t, but we know that they are going to happen at some point in the future. The very near future. Losses are a part of trading, all traders experience them, even the best in the world. What they do though, is that they plan for them, they know that the losses are coming and so they limit the damage that they cause. Within our risk management plan, they have their risk to reward ratio that we mentioned before. Those prevent the losses from being too large. Some go for a max 1% loss, which means you can lose nearly 100 trades in a row before busting out. Others a little more, but that means that even though you have made a loss, it is small, and a single win will bring you back to breakeven or even profit.
We understand that it can be hard to get started. As we mentioned, starting is often the very hardest part of it. Once you have your first trade and you understand what you are doing, those worries and anxieties that you had about trading will fly out the window. You will have confidence, you will know what you are doing and you will be able to trade more and more. It is simply getting started that is hard, but push yourself over that hurdle, and you will be on your way to a new career in forex trading.