Another great post from a member of the “club”! David has posted this in response to Ernies earlier question. I have posted here again as this is too good to get lost elsewhere. Great advice for anyone new to forex. I have seen less information in e-books that I have bought.

Ernie, Your questions and dilemmas are common amongst Forex newcomers . and not so new as well.

Forex is an exciting and (could be) rewarding financially -
One of the aspect it lacks is – camaraderie ! But – Forex is a lonely job – there are few traders who will share their ‘Secerets’ and ‘System’ with you .

There are few ‘winners’ in this trade (Some say ’90% lose money in Forex)
Some compare it to a ‘Casino’ betting.
The REAL successful traders have no incentive to share it with anyone. The others – either built web-sites or sell signals , or just wander in the darkness.

Marc is one of the few I`ve seen so far – who opened his heart and notebook and is willing to teach you ! Follow him ! (Twitter too)

I wanted to contribute a bit of my limited experience with Forex trading.
To make it easier to follow here are some of my trading lessons:

1) ‘Nobody knows what the market will do ‘

You could listen to advice – but always remember this #1 .

The signal sellers , the fancy web sites that promise you miracles – better print and post this rule. The FX market is so huge, so involved , and so morphing – makes it next to impossible to predict.

( I’ve seen the Dollar plunge 10% in value in 15 minutes when a small Cessna was flying directly on a collision course toward the White House’ shortly after 9/11 . Turned out to be a lost flying student and his instructors.
Usatoday.com/news/Washington/2002/06/19/white-house-evacuation.htm)

There are exceptions, and like any profession or ‘trade’ – you will have to ‘spend the time and ; money’ to find them.

If anyone tells you (And it goes for life in general too )
“It will be easy and you don’t have to learn”  Click on ‘Delete’ !

2) You can’t take ‘PIPS’ to the grocery store

PIPS are just numbers.
In some trades a PIP worth $10 , some equal $9 each , and some are $15
If you trade a ‘Mini’ contract your PIP is a mere $1 …….
So will you sell everything and just trade for 15 PIPs a day ? You Don’t !

The focus on PIPS is misleading .
You have to measure your results in Dollars ! And sense.
(or what ever currency you had opened your trader account with).

In Large accounts – a mere 10 PIPS can represent Thousands of $$ !
PIPS don’t take into account the ‘Spread’ the ‘Interest’ and other charges and fees brokers will charge you on your way to ‘The cashier ‘.

3) Demo trade for as long as it take to establish a winning system !
If you feel comfortable after 30 days of Demo trade – you are lucky .
I recommend NOT to put a time limit on developing and perfecting a weather proof system ( Easier said than done )
And even than …take small steps ( Like feeling the water temperature) .

4) The key is ‘Money Management’ !

Managing risk is studied in the best of business schools.
It is a subject by itself – and I’ll expand on it by special request.
What makes the difference between ‘Trading’ and ‘Gambling’ is money management !.
And ‘Capital preservation’ !

In Forex this issues takes on added importance since there are 50% chances the market will change course at ANY GIVEN moment.
The few times I had suffered huge losses were when I took ‘too big a leverage; of my position – and suffered a ‘Margin Call’ ( Guess I wasn’t ‘Too big to fail’ back than ……) But I learned my lesson.

5) Fear and  Greed are good helpers – if you harness them !
We are all humans (well…Most of us are)  and utilizing our emotions is what makes us superior to machines, (Albeit the narrowing gap…..)

Fear – Holds you to carefully trade while assessing all risks.
Greed – Brings you here in the first place and keep you going for more.
Think of it as Hot and Cold water. If you utilize only one, you may get burnt , or freeze,but if you find the right balance – you are on your way to the promised land !

6) Let the market work for you !  Not the other way.

I used to chase the market ‘Not to miss on a trade’ that looked so promising. ‘What a rally…. what a ‘Stampede’. I used to get so excited…especially during economic news ( Usually 8.30Am EST ).

Nowadays I only use ‘Entry orders’ where it is more likely my position will bear fruits.

It`s a bit like chasing a fish in the ocean – the chances for me to catch it – are slim to none – the fish is faster , slippery, and can change his swimming direction with a fraction of a second – you will lose your breath and remain hungry.

But – if you” learn to set your ‘traps’ wisely – in advance – the fish is more likely to fall for your baits.

I ‘Clip’ most of my ‘profits’ at around 8 AM EST ……why ?  The fish took the bait overnight and I had my harvest ready in the morning.

I find that many a times – I do BETTER and earn MORE when I am AWAY  from the screen , Tinker-less , trade less and Emotional-Less ( Like Marc’s walks on the beach…..) than when I bite my nails looking how the market chips away off at my ‘profit’……

7) You didn’t earn anything – until you take your $$ out of the broker’s acct.
Remember that you had paid in with your hardest earned money . The money sits there at the Broker’s account To serve as collateral for your trade

Don’t let it pile up too high – YOU have to pay yourself – Like Payroll – when the heap gets higher – or you did nothing – Having your gains on ‘Paper’ only means little. Reward yourself – Even symbolically -once you Cushioned your account. I also set up an anount

Most  info and tools are free.

The ‘Retail’ part of Forex experienced a huge push in recent years . Millions of us are now on line trading.
The competition between dealers ( another separate subject ) is to your advantage. There is a glut of knowledge. Mostly free !
Books – Check first with your library…most books are boring and re hash what old info. After you read and LIKED the book – than think of buying it.

There are some useful forums ( ForexFactory.com ,DailyFx.com many more like these , don’t forget your salt grains !) You can really find good stuff on line .

I strongly recommend working with a ‘Mentor’ ! – someone with experience that will help you separate the chaff from the wheat , help you avoid pitfalls, and shorten your discovery path.

It is hard to find them – the good one are busy – and the bad ….are just that.
Try join a ‘Meetup’ group in your area. It is important to ‘press flash’ ‘see faces’ and bounce idea of a common board. ( Go to www.meetups.com)

I’ll break here on a ‘to be continued later’ promise  – as not to overwhelm you with too much info. Or blind you with science.

Best of luck ! And you’ll need it !!!

David