Forex trading is a good way to make money.  It can be a full time profession or just a part time ‘fling’ as a secondary income.  But forex trading can also be a bad thing to lose all your savings much faster than you can think about it.  That’s why the most important step when deciding to become a forex trader is education.

Without education you will have less chances of making it as a trader than winning the lottery.  You will always be trading off your gut feeling with high emotions, therefore putting yourself in a dangerous position, and unfortunately market will always be there to take your money. Properly educating yourself in the other hand will ensure that you’ll make only informed decisions, therefore positioning yourself into a successful path and a long joyful forex trading adventure.

Make no mistake there is no other way!

And if a company or a person is offering and promising fast way to riches with their trading system, signal services, trading strategies and what not, you’ll be very disappointed. 

Learning forex as a subject can be divided in four educational parts:

Technical Education

In this part you will learn the actual trading (placing orders) along with price charts (bar, candlestick), all technical indicators (MA, MCAD, Volume, RSI etc.), recognizing trends and support and resistance.

Fundamental Education

During the time when you’re learning the fundamentals you will learn to read, understand and follow the economy- both, local and global.  You will learn to catch big changes in political arena which will affect the market;  you will learn some big names and follow every move they make as you will realize that the market shakes even when they sneeze (e.g. Ben Bernanke – Federal Reserve Board, Chairman); and also the importance of economic news releases (e.g. Non-farm payroll, GDP, PMI, customer index, etc.), their influence and trends.

Psychological Education

 This is the most important part of forex trading education.  You’re emotions will be your biggest enemy during trading, and during this part you’ll learn to overcome all the frustration, see the mistakes and learn from them.

Money Management

As the name suggests here you’ll learn how to manage your trading capital.  Know ups and downs of leverage, importance of position size control, setting realistic expectations, and everything else in between that will prepare you to not worry about margin and margin call.

If you didn’t formulate a trading system yet, you don’t know what those lines in the charts are, or what is GDP or MA, you’re a beginner or newbie, therefore you shouldn’t be trading with real money yet.  Your main concentration should be educating yourself, understanding what is and starting to put together your trading strategy.  At this time the only trading that you should be doing is demo trading, where you will learn more and become comfortable with the tools that you’ll be using.