I’ve been intrigued by the Forex and futures markets for a couple of years now, although my first experience a few years back was a pretty sad error on my part. I jumped in without even a lick of knowledge regarding what it takes to become successful- all I saw was an endless stream of seemingly easy money. Luckily for me, I recognized how much of a moron I was and pulled my money out before I made any serious financial mistakes.

Fast forward to about April of this year. My good friend calls me up to question me about something Forex-related, knowing that I dabbled in it at one time. He informs me that he’s been intrigued by the markets for a while and wants to make a long-term commitment out of studying them. Before long my interest was sparked again, and I once again began devoting time and energy to trading, but this time with a completely different outlook.

This time I vowed not to fall prey to the unrealistic hopes and dreams of most beginning traders. I’ve come a long way since this spring, but my journey is still in its infant stage. Here are the basic steps I’m taking to hopefully get me to where I want to go:

1. Take a Very Methodical Approach to Learning and Applying Trading Techniques:

Rather than slapping some random indicators up on my charts like many newbs do (myself included back then), I’m learning the principle concepts to price movement (trendlines, support/resistance zones, Fibonacci retracement, price action patterns, etc…) It’s absolutely fascinating to study these concepts and the market psychology behind them instead of looking for the “holy grail” combination of technical indicators.

I’m also taking a very patient approach to applying what I learn. In the Forex community, you often hear the importance of demo trading to hone your skills without any money on the line. This is all fine and dandy, but I have a problem forcing myself to psychologically trade a demo account the same way I would with money on the line (I think A LOT of people do, which is why the transition from demo to live is often so tough). I prefer to trade a live account, but I’m not ready to put much money at all on my trades. This is where Oanda comes in.

Oanda allows for odd lot sizes, allowing traders to precisely decide how big (or small) they want their position to be. This means I can trade for literally pennies. I only have $100 in my account, and I only risk a tiny, tiny amount on each trade, but the psychological feeling that comes from putting up real money is present. I plan to very gradually increase the funds in my account as my trading skills progress, effectively easing or even eliminating the transition period.

2. Eliminate the Mental Roadblocks:

The vast majority of traders fail not because their actual trading skills aren’t good enough, but because their mentality is not correct. I just finished reading Trading in the Zone by Mark Douglass, and it was an incredible read. This book makes you aware of all of the paradoxes in trading and how they often ruin our chances for success. For example, we are naturally wired to fear situations that might cause us harm- be it physical, mental, financial, whatever. However, fear is an absolute killer when we want to trade profitably. If we are afraid of losing money on a trade, our decisions will be negatively affected by the debilitating consequences of being afraid, and what we fear will almost certainly happen as a self-fulfilling prophecy. Douglass identifies psychological obstacles such as these and explains clearly how they can be consciously overcome.

3. Learn and Apply Strict Money Management Rules:

This is vitally important. Even with killer trading skills and a solid mindset, a proper money management system is absolutely crucial. The goal here is to minimize the inevitable drawdown periods while allowing compound interest to grow your account. It’s really not that hard to learn and apply such principles, but it does take some effort to crunch the numbers each time. However, trading without a money management plan is a recipe for a blown account.

4. Treat it Like a Business:

To be successful in this business, we need to treat it as one. I’ve kept all my notes/links/chart examples organized in OneNote for easy reference. I keep extensive records of each and every trade so I can learn and build on each one. This isn’t a get-rich-quick opportunity, and worthwhile results are going to require significant efforts. It really is like growing a business.

5. Persevere!

I’ll wrap things up with this: There are times when it’s really easy, when I’m full of excitement and motivation, but there are always going to be times of frustration when it seems like I’m just spinning my wheels. It’s during these down periods that I need to dig deep and remind myself of why I’m doing this.

If I can adhere to these steps that I’ve laid out, I don’t see any reason why I can’t succeed. I feel a lot better now that I’ve actually written these out. I will be referring back to them often.