I’ve been receiving questions from some newer traders recently…
Is your stuff suitable for people just starting out? Is it still possible to trade from home even around a day-job? I don’t have a great deal of money to spare right now so can I still get started with trading?
You know the kind of thing… all the questions it’s perfectly normal to have on your mind when you’re first starting out.
I know I certainly had things like this running through my head, because taking those first tentative steps can feel so precarious. You just want someone to take you by the hand and say: ‘Look, just do this, you’ll be fine.’
Now if you’ve already got some experience behind you, you’ll know full well it is certainly possible to trade from home around a day-job. Yes, you can get started with a very small trading bank (and it’s nothing to be ashamed of).
If I have been doing my job properly you’ll know my material – both on the Trader’s Nest website, and inside my members-only products – is very much geared towards simple and clear explanations of what to do and why so you can make good use of it, whatever your level of experience.
But for those who are still finding their feet, or are perhaps a bit newer to the Trader’s Nest community, I’m taking us back to basics this week…
If you’ve been bitten by the trading bug and are still not quite sure about taking the plunge, let me give you some words of wisdom that might help…
5 top tips that’ll help you trade Forex from home
1) Trade in a way that suits your availability.
It can be so tempting to try and adopt a particular trading system or strategy you’ve discovered, but do take the time to figure out if it’s going to fit in with the other demands being made on your time.
It is perfectly possible to trade alongside a day-job, or while looking after your children at home, but perhaps a strategy that needs you to continuously monitor the screen isn’t going to be the best way to do it.
In this situation I think you’d be best looking at longer-term end of the trading spectrum…
You could be a Swing trader/Position trader, holding trades for days (or even weeks) at a time. You’d just need to check in on your holdings once a day: perfectly possible to do this in the evenings, and the beauty of this approach is you can participate in some really strong and profitable longer-term moves whenever they are available.
2) Set aside your start bank. Protect it and nurture it.
There’s absolutely no stigma attached to trading with a smaller bank. These days you can get seriously started by setting aside just a couple of hundred pounds and I’ll bet there are many traders who wished they started at a smaller than they actually did.
After all, it’s inevitable that there’ll be the odd ‘beginners mistake’ while you’re learning your craft – better to get those out of your system on a small scale, I reckon!
But just because it might be small in size doesn’t mean you shouldn’t jealously protect every penny of your account. Manage the exposure on your trades in the right way from day one and you’ll find it starts to grow all on its own.
Money management in trading comes in two stages: first of all you need to survive, so always trade in a way that lets you live to fight another day; then you’ll find that stage two – prospering – can happen automatically.
3) You can buy the most valuable trading tool ever for just 79p.
What’s the most valuable trading tool you’ll come to rely on time and time again? Is it super-secret indicator that tells you exactly when it’s time to buy? Or a Forex ‘robot’ that slaves away in the markets on your behalf so you never need lift a finger? Or how about a special smartphone app that means you never need be away from the markets for more than a minute?
Nope, nope, and nope again.
The most valuable trading tool you’ll ever have is one you’ll create over time yourself: it’s your personal trading journal.
What gets measured gets improved, and by poring over your trading notes you can spot some very revealing patterns indeed. Your records can help you cut weak areas from your trading and really let you capitalise on your strengths.
You can record your thoughts and actions in a digital document, but there’s something about writing it down on paper that makes it so much more personal and potent. (Or is that just me being a bit old-fashioned?)
It doesn’t have to be anything fancy: get yourself one of those spiral-bound reporter’s notebooks – 79p each at my local newsagents – and you are in business. But please do make sure you are able to record your trading actions and the thinking behind them before you take your next trade. You won’t regret it, I promise.
4) You must be willing to embrace risk.
The simple fact is as traders we are rewarded by a willingness to assume a level of risk. I’m not talking about doing anything reckless, or approaching trading with a gambler’s mindset, but the old adage of ‘nothing ventured, nothing gained’ applies here just as it does in any speculative venture.
And however you look at it, there is risk involved wherever money is concerned…
Stash your savings away in a high street bank and there’s a risk that you might find yourself fighting to actually get your hands on it one day – just like account holders at Northern Rock did a few short years ago (and next time the outcome could be much worse!).
Even holding your funds in hard cash exposes your buying power to the eroding effects of inflation – you’ll find the value of your money diminishes over time.
So an appropriate level of risk is going to be a factor however you look to protect or increase your wealth. You can’t really avoid it and it’s something that shouldn’t be feared.
5) There are three simple truths when it comes to trading.
I’m a strong believer in effective trading being simple trading. You don’t need to have a computer set-up to rival mission control at NASA, you don’t need to know loads of complicated theory, and you don’t need to use any of the fancy tools you’ll find on the trading platforms (although it’s perfectly fine to do so, if the tool gives you a profitable edge to some degree).
All you need do is enter and exit the markets in a way that gains more money on the winning trades than gives back on the losing trades. And the great news is there are loads of different ways to do exactly that!
So that’s one of the three simple truths. Here are the other two:
You don’t need to know what will happen next in order to make money.
So don’t worry about predicting the market’s every move. Just find the conditions that give you a profitable edge, pull the lever on the trade, and accept each result trade-by-trade.
You will get a random pattern of winning and losing trades.
Don’t let your ego trip you up by wanting to be ‘right’ all the time. You will get losing trades, it’s a fact. So welcome them with open arms. Every losing trade takes you one step closer to the next winner and remember what we just agreed…
You’ll be entering and exiting the markets in a way that gains more money on the winning trades than gives back on the losing trades. It means there should be nothing for your ego to be worried about!
So please do take those five tips with you as you start preparing to trade from home: I’m sure they’ll help set you off on the right foot. And if you’re already actively trading, is there anything from that list of tips you might be able to add to your current procedures? (Hint: a trading journal!)
Be Prepared: Market Moving Data Coming This Week (London Time).
Wednesday 3rd June:
09:30 GBP Services PMI
12:45 EUR Interest Rate Decision
13:15 USD Non-farm employment change
13:30 EUR ECB Press Conference
15:00 USD ISM Non-Manufacturing PMI
Thursday 4th June:
12:00 GBP Interest Rate Decision
Friday 5th June:
13:30 USD Employment numbers
Monday 8th June:
– no big reports
Tuesday 9th June:
– no big reports
It could be an interesting day on Friday… we’ve got the monthly US job numbers, and the first of Greece’s payments is due to the IMF on that day too. Crisis talks are currently being held in Berlin between Greece, the IMF and the ECB. Can they scratch together the cash or is this the final straw for Greece’s eurozone membership? Let’s see what happens on the day!
Until next time, happy trading!
P.S. Don’t forget to nip over to the TN Facebook page here. Hit ‘like’ and leave me a quick comment if you can – let me know your own top tips for traders just starting out.