Author: adrankone

There are many areas of life where technical skill is not enough to succeed. Having a clear head, courage, not panicking and being able to balance a willingness to take risks with the wisdom of when to hold back are all mental skills that can separate the very best from the merely good.

Examples of this abound. In sport, for instance, the top players all have great skills, whether it is superb hand-eye co-ordination, fast feet, or a big punch. Yet sports psychology is a critical area of enabling individuals to maximise their talents, think clearly and hold their nerves under pressure.

Forex Trading might not take place in front of crowds of thousands of cheering fans or millions watching on TV, but there is still a lot at stake, especially in the financial aspect.

For any trader looking to make the most of their prop funding, the likelihood of doing so successfully is, just like in sport, as dependent on the right psychological approach as it is on your technical skills.

Why Psychological Skills Matter

Many basic skills have been widely acknowledged as highly important for Forex traders. These include dealing with emotions by not being controlled by fear and anxiety, or, conversely, overconfidence. A level head will help you avoid getting carried away with greed, while avoiding impulsive trading through fear of missing out can prevent losses.

On other occasions, it can be about some basic psychological thinking, whether it is avoiding confirmation bias (which can mislead you into errors) or making bad decisions due to stress and tiredness.

All this may be sensible advice, but how can you capture these mental skills and develop the aptitude you need to ensure you keep your head in the heat of trading?

The answer may be found in doing some extensive reading on how to master the psychological side of Forex trading. The good news is that there are some excellent, highly recommended books out there.

A Top Ten Of Books To Consider

For example, Tradeciety has listed a top ten of books on this topic. Some of them will be very instructive, while others are challenging.

The latter case includes its top-rated book, Every Loser Wins, by Tom Hougaard. It focuses not on succeeding, but on how to handle failure and learn from it, ensuring that next time you can succeed because you have understood why you failed.

Some books delve deep into expert psychological knowledge. Neuropsychology may sound like it’s just for boffins, but Market Mind Games by Denise Shull provides an analysis of the cognitive and emotional processes that shape decision-making. By enabling traders to recognise these and not be controlled by them, the book helps improve decision-making.

For a combination of these themes, number three on the Tradeciety list may be useful. The Daily Trading Coach by Dr Brett Steenbarger is about self-improvement, whether learning to handle stress better or learn from mistakes. This is useful for those who want to make every trading day an occasion when they can get better at it.

Dr Steenbarger also wrote Radical Renewal, which addresses other issues like mental health and adaptability.

Handling emotions is one thing, but Trading in the Zone by Mark Douglas discusses how traders can achieve a mindset that strips out emotional factors and deals with probability and managing risk. He also wrote the Disciplined Trader, which has similar themes.

Books That Appear In Multiple Recommended Lists

The Tradeciety list, produced in December 2023, is far from the only one out there, which means those seeking psychology books to help them trade better can find more recommendations in other lists.

However, sometimes the best move is to see which books and authors appear in multiple lists, as this adds credibility to their work.

For example, How To Trade produced a list of seven recommended books in February this year. Both Mark Douglas’ books were on it, as was the Daily Trading Coach and another Steenbarger book, The Psychology of Trading. That might just suggest you may do well to read anything by Steenbarger. Denise Shull’s Market Mind Games are also on this list.

There are plenty of other overlaps with different lists, too. Market Mind Games is also in the Trading Education top ten,  alongside Steenbarger’s The Psychology of Trading and Douglas’s Trading in the Zone.

Of course, none of these lists are exhaustive, but when the same authors and works continually pop up on recommended lists, this does offer some very strong hints on where to start. 

Quite apart from which books you choose to read, the very act of doing so can have a psychological benefit, as you will never feel the despair or isolation on a tough trading day when you know that you can read something later that will help you to do better tomorrow.

Given just how unpredictable the currency markets have been in recent years, it is perhaps not surprising that quite a few people have started investing in forex with the help of a prop firm that provides them with instant funding.

What makes forex special compared to commodities, stocks and bonds is that there are so many varying elements that can shape and shift the prices of currency pairs, from geopolitical events to tariffs to overall market sentiment.

The best traders in the space are the ones who can navigate these often complex sets of circumstances and find a clear, stable path. Here are some of the best forex traders and what we can learn from their most successful trades.

Stanley Druckenmiller

It is very difficult to discuss the forex market without talking about Quantum Fund, the former hedge fund owned and operated by George Soros. However, whilst Mr Soros is a very public and very important figure in the world of forex, a perhaps even more critical figure was his right-hand man, Stanley Druckenmiller.

When he was hired by Quantum Fund, his first success was going long on the German mark right after the fall of the Berlin Wall, as the initial depression of the currency due to the complexities of merging two divergent sides of the country appeared to be overly pessimistic.

This turned out to be a masterstroke and would ultimately help him with his most famous trade by creating a place for investors to go once Black Wednesday hit.

Whilst Mr Soros is credited as the man who “broke” the Bank of England and potentially changed the history of the country in the process, Mr Druckenmiller ultimately spotted the weakness of the pound in the European Exchange Rate Mechanism.

Mr Druckenmiller’s philosophy for trading in forex was in the importance of position size, particularly given that Quantum Fund would often hold gigantic positions, either short or long, but also that strong convictions should be held as strongly as the market reality allows them to.

As well as this, it also highlights just how different forex is to other markets in the opposite way to many other traders; whilst an excellent forex trader with a remarkable hit record, he infamously struggled to handle the very different world of technology stocks.

He lost a lot of money betting against the market for reasons that turned out to be true, and then lost billions jumping into the dotcom bubble right as it burst.

Andy Krieger

At one point the most successful currency trader in the world, Andy Krieger was a famously aggressive and assertive operator in the forex market and his early successes gave him the leverage and capital to make one of the most audacious short plays in forex history.

Leading up to the events of Black Monday, the 1987 stock market crash, his $700m capital limit given to him unanimously by the board of Bankers Trust, put him in the perfect position to short the New Zealand dollar.

As investors in the US dollar quickly tried to get their money elsewhere, Mr Krieger noticed that the Kiwi seemed hugely overvalued as a result of the market rush, so he accumulated a short position so large it was said to be more than the liquidity of the New Zealand dollar itself.

Following a precipitous fall in the value of NZD caused by both the short position and the rally of USD and a major political controversy in New Zealand itself, he ultimately earned Bankers Trust $300m.

The lesson we can learn from Andy Krieger is the importance of timing entry and exit positions, something that he perfected through his remarkable grasp of the fundamentals of forex, mixed with more than a little bravado.

Had he waited any longer, he might have lost a fortune due to a surge in the value of the NZD in 1988.

Bill Lipschutz

Trading is as much about weathering and learning from mistakes as it is about reaping the rewards of success, and perhaps nobody epitomises this more than Bill Lipschutz.

The first part of Mr Lipschutz’s journey is one that many traders will be familiar with; he inherited $12,000 as an inheritance and turned it into $250,000 through a remarkable run of what he later described as “beginner’s luck” before nearly losing it all with one bad trade. As he later put it, there is a lot of pain in trading.

However, he persevered and treated it as a learning experience. He then joined Salomon Brothers as part of their then-new forex department and at one point was making $300m a year for the major investment fund. 

He left in 1990 to continue his development as a trader and highlighted a rather extreme example of the benefits of feeling the pain of loss but treating it as something to learn from.

There is a growing interest in forex trading as a way to top up your income, or even to switch to a full time career. While it’s more accessible than ever before, forex trading can also be complex and risky, especially if you are a complete newcomer. 

However, everyone was a beginner once, and even people with no background in finance or economics have gone on to become successful traders. Here’s a look at how to learn forex trading from scratch, so that you can navigate the complexities of the markets with confidence. 

The basics: what is forex trading?

First up, let’s take a look at the nuts and bolts of forex trading. ‘Forex’ is a portmanteau of foreign exchange, which is necessary for overseas travellers and international businesses and investors who need to use the currency of the particular country they are dealing with. 

However, the majority of foreign exchange transactions are driven by speculative traders purely for the goal of generating capital, or to hedge against the risk of future changes in price, or to diversify investment portfolios. 

The basic concept involves buying one currency while simultaneously selling another, with the aim of profiting from the difference in the relative values. The trades can be made as long term investments over several weeks or even months, or made within a day or even minutes. 

How the forex markets work 

The forex markets are the largest global decentralised financial markets in the world, with a daily trading volume of around $7.5 trillion. Due to international time zone differences, they also operate almost around the clock, which makes them more accessible to traders who also work a full time job. 

There are four main sessions: London, New York, Tokyo, and Sydney, which overlap at opening and closing times, creating particularly busy periods with good trading options. This makes the forex markets highly liquid, which means buyers and sellers are usually always readily available, particularly for the major currencies such as the US dollar or the Euro.  

What drives currency prices?

Currency prices fluctuate according to a range of influences, including economic indicators of individual countries, such as GDP, interest rates, inflation, the consumer price index (CPI) and unemployment rates. They are also driven by geopolitical events such as elections, wars, natural disasters and pandemics; and also market sentiment and appetite for risk.

Therefore you should start to follow the current affairs and economic data releases for the currencies that you are interested in trading. For beginners, it will be in your best interests to trade with the ‘majors’. These are currencies from the major economies, including the USD, EURO, GBP, AUD, JPY, and the CAD. 

Learn the terminology of trading

It’s best to make an effort to learn the language of trading before you dive into the markets, otherwise you will risk becoming confused and will be more likely to make basic mistakes. There is no need to spend a lot of money on learning materials, as there are plenty of free resources available on the web.

Decide on the learning method that works best for you, such as an online training course; independent reading; webinars; or immersing yourself in trading forums and communities, and perhaps working with a mentor. You may choose a combination of all of these methods. 

When selecting a training course, don’t just jump at the ones that appear at the top of the search engine results pages, because they can vary considerably in terms of content and quality. 

Red flags to look out for include constant promises that you will be making thousands of dollars within a few months, and too basic and brief or overly dense and technical explanations. Research a few courses and pick one that is most compatible with your learning style, in terms of language, tone, and content. 

Remember that forex trading is a dynamic process, and you should continually invest in your knowledge by reading widely and keeping up with current affairs and political analysis. 

Put together your own trading plan 

When you feel that your knowledge level is sufficient to navigate your way through a trade, it’s time to put together a trading plan. This will guide you through your decision making and stop you from making impulsive moves that aren’t supported by technical or fundamental analysis (which you will have learned about during your training course).

Keep it simple: a straightforward strategy can be just as effective as a more complicated one. There’s no need to pile unnecessary pressure on yourself as you make your first forays into the markets. However, your strategy should include basics such as whether you will be making long term position trading; swing trading; day trading; or scalping.

The tactic you take will depend on the amount of time you have available for trading, and your individual characteristics and preferences. For example, scalping and day trading are time-intensive, as they require intense concentration. You will also need the ability to think fast and be comfortable with making quick decisions under pressure. 

The other crucial element to have in place is a risk management plan. If you aspire to gain access to a funded account with a prop firm, you’ll need to be able to demonstrate that you can manage risk responsibly. In fact, the essence of good trading could be boiled down to taking carefully managed risks, otherwise you are really just doing little more than gambling.

Always pre-define your market entry and exit points, and use stop-loss and take profit orders to mitigate against damaging losses. Never trade more money than you can afford to lose, and avoid the temptation to overleverage. As a general rule, new traders should not risk more than one to two per cent of their account value per trade. 

Start trading with a demo account

A demo account is a good stepping stone between the theory of forex trading and the cut and thrust of the live markets. It will help you build your confidence, as you will be working in simulated market conditions, but without the additional stress of trading real money. What’s more, many prop firms offer a free 14-day demo trial, so it won’t cost you anything.

However, to give yourself the best chance of success, treat your demo account as if it were real money. This will mean that you encounter the most realistic trading scenarios, and thus your learning experience will be more beneficial. Start small and do not become over-ambitious, and always stick to your strategy. 

It’s also a valuable opportunity to familiarize yourself with the interface of the trading platform, so you won’t waste time searching for certain features when you progress to live trading. Remember, if you do well during the demo phase and hit your profit targets, you will have the option of progressing to the evaluation program.

You’ll usually need to pay an upfront fee to take part in the evaluation stages, but some prop firms such as FTUK will refund this if you pass one or two tests during the 14-day trial. This will then give you access to a fully funded account with a scaling trading plan. 

Initially, the profit share will be split 50:50, but as you progress you can work your way up to an 80:20 profit share in your favour. You will also be able to scale up your account size to a maximum of $6m +, so there really is serious money to be made if you are prepared to put in the time, and have the dedication and resilience to learn forex trading from scratch. 

Refining your skills

When you feel confident enough in your basic skills, it’s time to start honing your trading mindset. This will give you a competitive edge, and help you to remain calm, positive and resilient even when the waters are choppy and your trades are not going as you hoped and planned they would.

It’s worth reading up on trading psychology, because when it comes to dealing with money, we all have strong feelings. Even if you don’t regard yourself as a particularly emotional person, human beings are hardwired to protect their assets and fear losses— it’s an evolutionary instinct that is impossible to completely suppress. 

The best tactic is therefore to work on developing your emotional intelligence, and educate yourself about the hidden biases that can subconsciously influence our decisions. If you find that you become overly cautious and fearful of making losses, this will impede your ability to make consistent profits. 

Conversely, new traders can be prone to becoming greedy at the first hint of success, and this can lead them into hanging onto a profitable trade for too long, or becoming overconfident in their abilities. Learn how to manage your emotions, and step away from the screen and refer back to your trading plan when you lose your cool. 

No one pretends that learning forex trading is a walk in the park: there is a lot of complex technical and financial information to get to grips with, and it’s a continual learning curve. However, often it is not a lack of knowledge or skills that lets traders down, but a poor mastery of their emotions. 

Here’s a look at forex trading psychology, and how to beat your emotions and bring your best trading mindset to the table. 

How your emotions affect your trading decisions

Forex trading holds a strong allure for people who want to grasp the opportunity to make a lot of money, and this means that intense emotions are subconsciously at work. The prospect of financial independence appeals to almost everyone: it brings freedom and security, and access to a more luxurious lifestyle. 

Therefore powerful emotions such as fear or greed can kick in when traders are navigating a volatile market or chasing a trade that’s on the up. New traders may be prone to underestimating the subconscious influence that their emotions can have, and this has potentially disastrous consequences. 

Humans have evolved over thousands of years to have a strong response to fear of losses, and have an instinct to build up surplus supplies as a survival insurance policy. When we sense that our precious assets are under threat, the body’s ‘fight or flight’ instinct kicks in. 

This is also known as the stress response, as the sympathetic nervous system responds by pumping adrenaline around the body. The heart beats faster, blood pressure rises, and extra oxygen reaches the brain and muscles. This physiological reaction is useful if you are fleeing a predator or need to get yourself out of the way of an oncoming vehicle quicktime.

However, in non-life threatening situations such as forex trading, a burst of adrenaline is less helpful. It can prompt traders to make impulsive decisions, when a successful trade outcome requires detached and logical reasoning. 

No matter how much effort they have put into crafting a trading strategy and risk management plan, an inexperienced trader will frequently abandon it at the first ripple of the market. This can result in a poorly executed trade, and despite a resolve to do better next time, the trader will go on to repeat the same mistake over and over.  

It’s not possible to change an instinctive response that humans have hardwired into their system, but it is certainly possible to learn how to be aware of the triggers and signs, and put strategies into place to manage them. Here’s a closer look at some of the most common emotional traps that traders fall into, and how to avoid them.

Fear

The fear of making a loss is at the heart of many poor trading outcomes. It can prompt traders to close positions too early, missing out on potential profits. It can also cause traders to hold on to a losing setup for too long in the hope that the market will rebound, rather than cutting their losses. 

Greed

Greed can take over when a position is doing well, and a trader might over leverage or hold on for too long in order to make a bigger profit, ignoring their risk management strategy. 

Overconfidence

Hitting on a winning streak can be a great ego booster for new traders. However, this can easily spill over into a sense of invincibility and the taking of unnecessary risks. There’s no such thing as luck or instinct in forex trading: the key to consistent success is always careful risk management.

Revenge trading

A loss can provoke feelings of anger or frustration, and this can lead to impulsive revenge trading in order to try to reclaim the loss. These trades are based on emotion rather than research and rational thought, and therefore should be avoided. 

How to develop a good trading mindset

Prioritise your risk management strategy at all times

When you recognise yourself experiencing one of the emotions described above, such as fear or greed, your first line of defence should always be to take a step away from the screen and refer to your risk management strategy. 

Make sure that you are never risking more money in a trade than you can afford to lose, as this is a sure way to become emotionally overinvested in the outcome. 

Always calculate your risk to reward ratios and apply moderation to position sizes. Use stop-loss orders and take-profit levels to determine the parameters of each trade and hedge against catastrophic losses. 

Learn from the characteristics and habits of successful traders

There is no such thing as a 100 per cent success rate in forex trading: even the best traders will make losses on many of their trades. Therefore you should not define success as the simple binary of failure, but rather as a set of behaviours that result in a consistent performance over the long term.

Good traders are highly disciplined

A good trader will have the discipline to follow a trading plan at all times, even during turbulent periods in the markets or wider economic or political picture. Likewise, they are always able to adhere to their risk management strategy and will not give in to panic or herd mentality if there are unexpected market developments. 

Good traders are emotionally intelligent 

We can all improve our emotional intelligence, no matter what innate personality traits and characteristics we are born with. One of the key characteristics of emotionally intelligent traders is self-awareness. This allows them to be honest about their own fallibilities, such as a tendency to be loss-averse, or give in to moments of anger or panic.

It is impossible to completely suppress all emotions when we are trading, because as we have already discussed, these are gut reactions that have an important primary purpose. The key is to be honest and self-aware enough to recognise when your emotions are biasing your trading decisions, and to mentally pivot back to a more neutral mindset. 

Highly emotionally intelligent people are also resilient: they don’t brood on failure, but work out what went wrong and bounce back better. This mental toughness is essential for forex trading, because many trades will fail to hit your targets. If you let your emotions get in the way, you will continually be making biassed decisions that result in further failure.

Cultivate a positive outlook, and always remember that the emphasis is on a consistent performance over the long term, and there will always be a way to get past any obstacles and temporary setbacks. Finally, good traders are open to the views of others, but also trust their independent judgment. 

Good traders learn from their mistakes

We all make mistakes, and what matters most is how we react to them. Carrying on obliviously will soon lead to the repetition of the mistake, but on the other hand, taking it to heart will risk a loss of self-confidence and momentum. The key is to see a mistake as a learning opportunity rather than a personal failure.

Keeping a trading journal can be an excellent way to reflect on and refine your progress as a trader. Use the journal to record the factual information about each trade, such as the currency pairs, date and time, position size, and so on. However, expand on this to include your reasons for placing the trade, and reflect on the outcome. 

Review your journal entries regularly to gain insights into your trading style, and to identify patterns in your worst and best performing trades. If there are areas for improvement, make adjustments to your trading strategy after careful consideration. This will enable you to evolve as a trader while taking a prudent approach to risk management. 

Practice with a demo account

There is a very steep learning curve from learning the theory of forex to diving into a live trading situation. One of the best ways to bridge the gap is to practice with a demo account first. Prop firms such as FTUK offer a 14-day free trial, which will give you access to a funded account in simulated live market conditions.

This gives you the opportunity to test out your trading strategy, and also gives you a taste of making decisions when the pressure is on. However much we read up about trading psychology, the only way to forge your trading mindset is in the heat of the battle. 

Yes, you will make mistakes along the way, but you won’t have the pressure of dealing with real money (any profits or losses you make will be virtual). If events don’t go your way, you’ve still gained an insight into how you handle the heat, and you can step away and plan what you will do differently next time. 

Becoming a trader is like stepping into a completely new world, with a new language, set of core concepts and fundamental principles, particularly if you want to set up an instant funding account with a prop firm. 

It is easy to get overwhelmed at first and it does not reflect badly on you if that is the case; if you feel like there is a lot you do not understand when you first enter the world of finance, you know that there is a lot to learn and it is best to introduce yourself to it slowly.

By contrast, if you go in without doing some research and believe you know everything you need to, this belief will be seriously tested. It is not unheard of for people to lose their evaluation account within a few minutes due to reckless trading activity.

Having a willingness to learn, taking your time and understanding that successful traders will sometimes have losing trades or bad days will all help you become successful, and experience ultimately becomes the best teacher.

However, learning from experience requires some foundational knowledge, and with that in mind, here are some common but effective ways to learn trading skills.

Try Paper Trading

The best place to start is to practice your skills using a demonstration or paper trading account on a platform which suitably replicates the types of systems you would want to use in your trading career.

Many brokerages and prop firms have the option to use a demo account to practice, and that is often a good second step to practice the specific evaluation requirements to get a live account.

Many people learn best by doing, and paper trading can be a good start to dip your toes into trading, understand how it works and avoid the huge consequences that come from major market losses.

Some paper trading platforms even have rudimentary tutorials and guides that help you learn the basics in a way that you often cannot whilst trading live, in the same way, you cannot learn to swing a racquet during the qualifying stages of Wimbledon.

Whilst a trading journal is mostly associated with live trading, it can also be helpful at first to understand why you might have made certain trades.

Learn Essential Terminology

Generally, if you are uncertain about the definition of any term on an investment platform or website, you should not put any money into it.

There are some excellent websites such as Investopedia that will describe investment and trading terms in more understandable language that can help teach you the basics.

Once you have a groundwork of knowledge, your paper trading practice will become more useful, you will know the best questions to ask and you will evolve even quicker as a trade.

Treat yourself as much as a student as a trader when you are starting out and take every moment on the market as a learning experience.

There are some excellent books that cover the basics of trading as well that can be extremely helpful. Ultimately people learn in different ways and you should find the system that works for you.

Seek Out Mentors

Much like you should treat your early trading career as a learning experience, you should also spend time seeking out effective and generous teachers who can give you the benefit of experience.

Do not ask for tips on specific stocks to trade, but instead, look for a community of traders and ask them a few questions about trading strategy that you cannot find the answers to through basic research.

Ironically, finding the right mentor means developing a foundational set of skills. This will show that you have the potential to develop further.

Some will offer that guidance for free, some will work with other people in their trading group or prop firm out of solidarity, and some will want to be paid. In any case, it is important to find a mentor that will provide useful, relevant information.

Build Up Research Skills

Whilst the overall markets can be very complex and feature a lot of interconnectivity, it is possible to build that knowledge base slowly, and the best way to do so is to focus your attention very narrowly at first.

When you are paper trading or trying out small-scale trades, pick a small number of companies (no more than five) and look up their trading history and company news. For Forex, take a look at currency pair history and look at which pieces of economic news affect one currency but not the other.

This is a useful exercise in building your analytical skills, as you will be able to see which types of events, both internal and external, will affect the price.

Forex trading is attracting a lot of interest among people who are looking for a route to financial independence. Once it was shrouded in mystery and mainly accessible only to investment bankers, but now it’s relatively easy to learn forex trading for free and trade via an online platform with a funded prop firm account. 

However, these lowered barriers to entry do not mean that everyone can be a successful trader: making consistent profits takes a combination of knowledge, technical aptitude and emotional intelligence. Many people are taken by surprise at the investment of time and degree of discipline required, which leads them to ask: ‘is trading the hardest skill to learn?’

Here’s a look at the various aspects of learning forex trading that need to be considered in order to answer this question.

The unique challenge of forex trading

Forex trading at its core is simple enough: it involves the exchange of one currency for another in order to profit from the difference in market value. However, the sheer size and complexity of the forex markets, and the high volume of trades that are made every day mean that being a successful trader requires a specific set of skills. 

In order to carry out workable market analysis, traders need to be aware of the different elements involved. Technical analysis is the use of tools such as charts, graphs and indicators to identify trends and make market predictions based on historical data and the balance of probabilities. This will help you to make sound trading decisions.

Frequently used indicators include moving averages, candlestick charts, Fibonacci retracements, and Bollinger Bands. It is not necessary to have a degree in mathematics or economics to be able to master these techniques, but you will need to have a logical mind and the ability to grasp abstract concepts. 

Some traders rely on technical tools alone, but most also have a good understanding of fundamental analysis and use it to guide their decisions. This involves keeping up with the economic news and geopolitical events that affect the movement of the forex markets. 

Fundamental factors include central bank policies such as interest rate changes; unemployment figures; inflation rates; and consumer price indexes. Events such as elections, wars and natural disasters also impact the forex markets, causing fluctuations in currency price that traders should aim to profit from. 

Sentiment analysis involves being able to gauge the overall mood of the markets in order to anticipate which way prices will move in order to take profits, and to avoid being caught out by sudden crashes or rebounds. 

This is a skill that can only be acquired through time and experience, and it’s important to become confident in making independent and well-researched decisions rather than following the herd. 

Understanding the importance of risk management

One of the most important and difficult aspects of trading for some people to grasp is the importance of good risk management. Successful trading is about taking a series of well-managed risks rather than huge gambles. Effective risk management is essential for preventing damaging losses.

If you are able to secure a funded trading account, any losses that you make will be covered by the prop firm, but you’ll still need to operate within their risk management rules and meet other requirements, or you may incur penalties or even face the closure of your account. 

The basics of risk management include setting stop-loss orders; calculating the risk:reward ratio of each trade to justify your leverage; and diversifying your trades. Most prop firms want to work with traders who make well-informed decisions and who don’t take big risks with their money.

Trading psychology

So far, we have discussed all the knowledge and technical skills you will need to sustain your forex trading career. However, this is only one half of the equation: the other half is how you put all these elements together when you are actually making live trading decisions. 

This requires you to understand your personality type, think clearly even when under pressure, and be mentally and emotionally strong and resilient. This is referred to as trading psychology, or the trading mindset. It’s not a skillset that most people are born with, but will need to develop and cultivate over time. 

There is no fixed way of learning these skills, because we are all unique and have different personalities and strengths and weaknesses. The best strategy is to be honest with yourself about your personality traits and work with your best points, rather than try to suppress your character traits or try to fit yourself into a mold. 

For example, if you are naturally impatient and intuitive, you will probably be suited to a faster pace such as scalping or intraday trading. If you are more of a thinker and an analyser, then you will be better suited to swing trading or position trading, which will allow you more time to make methodical decisions.

Why managing your emotions matters

Whatever your personality type, it is important to learn how to manage your emotions well. This may seem to be a trivial matter to an inexperienced trader, but it is an issue that the most successful traders take seriously and continually work on. 

This is because when we are dealing with the loss and gain of something so fundamental to our survival and status as money, it brings out deep and powerful emotions. These have a basis in the psyche of primitive humans, who were hardwired to be greedy for the kill and to fear loss of reserves: it could literally mean the difference between life and death.

The modern day equivalent to this scenario is the prospect of gaining or losing money on the financial markets: inexperienced traders can allow greed and fear to cloud their judgement. Other emotions such as panic, overconfidence, excitement, impatience and a desire to avenge a loss or hurt pride can also lead to biased and irrational decisions. 

These emotions are intensified by the volatile nature of the forex markets, which can cause psychologically unprepared traders to abandon their strategy and make rash decisions that are driven by emotions rather than logic. It’s therefore essential that traders develop an awareness of their emotions and learn how to manage them intelligently.

It is unrealistic to attempt to completely divorce yourself from your emotions, but rather to recognise when they are impacting your behaviour. Develop some strategies for stress management, such as sticking to a schedule and taking regular breaks; and maintaining a balanced lifestyle that includes getting enough sleep, exercising, and a balanced diet.

Some people find that meditation techniques such as mindfulness are useful for focusing their minds at the start of a trading session, to reduce mental noise and get into the calm and neutral headspace needed to make good trading decisions. 

The importance of market experience

One of the most frustrating aspects of becoming a successful trader is that you actually need to spend a lot of time trading and make some mistakes along the way in order to become proficient. This is known as qualitative experience. It is a bit like becoming good at sport: to be a great tennis player you need to play a lot of matches.

Only this way will you develop the mental reflexes, technical proficiency and psychological insight required to become a professional, whether in sport or trading. You’ll also need to be prepared to learn from your mistakes: keep a journal to record the details of each trade, and justify your reasons for making it.

Over time, this will become a valuable asset, as you can use it to review your progress and identify patterns in your least and most successful trades. This will enable you to refine your trading strategy and will prevent you from repeating the same mistakes. 

If you have no previous trading experience, the best way to begin is by taking advantage of a free trial with a prop firm. This will give you access to simulated live trading conditions for 14 days, without the prospect of losing any real money. You will be able to test out different trading strategies and understand better how well you perform under pressure. 

So, is forex trading really hard to learn?

For those with the aptitude, determination and emotional resilience, forex trading offers a flexible career choice that can be carried out from any location and at any time. It requires low investment of personal capital and offers potentially very high financial returns. 

The forex markets are highly liquid, which means that payments are usually fulfilled quickly with little price deviation. Therefore, it’s a very attractive career choice for those who are prepared to put in the hard work and overcome the inevitable challenges and setbacks that will occur along the way. 

It is undoubtedly difficult to learn, and it involves developing the right mindset as well as mastering the technical skills. However, if you are aware of what will be required of you and prepared to step up to the challenge, you will in time reap the rewards of your efforts. 

Forex trading is attracting a lot of curiosity among people who are interested in topping up their income or even becoming a full-time trader. Learning forex trading is also a rewarding experience in itself, as mastering a new skill can bring a sense of accomplishment and satisfaction. 

You’ll also broaden your understanding of the wider geopolitical issues and economic challenges that are facing the world today as you get to grips with the fundamentals of forex. Traders also need to develop a resilient mindset and learn how to manage their emotions effectively in order to make good decisions. 

All of this knowledge and skills will not only set you on the right track to becoming a profitable trader, but will also enhance your personal and professional life as you develop new insights into the financial world and your own psychology.

Once you have acquired a working knowledge of the trading process and put together a strategy, you will be able to explore options such as gaining access to a fully funded account with a prop firm. This allows you to use premium trading platforms to make trades with high leverage at no personal financial risk.

Learning forex trading takes time and patience, and you will need to enjoy at least some aspects of the process for its own sake, rather than because you are looking for a shortcut to make big bucks. The forex markets can be complex, and it takes dedication and hard work to become a successful trader. 

However, so long as you are prepared to invest the time, you don’t need to spend a lot (or even any) money in order to get started on your learning journey. Here a look at how to learn forex trading for free. 

Start with a free online course

A search engine query will turn up literally thousands of free online courses designed to help beginners get started with forex trading. Not all of these courses are created equal, so do some digging and check out trusted review sites and bloggers for recommendations on the best quality ones.  

Steer clear of courses that promise unrealistic ‘get rich quick’ returns. Forex trading has a relatively long learning curve with no short cuts. Such courses are making false promises and the only way to make consistent profits is by taking a controlled approach to strategy building, combined with attention to detail and strong risk management. 

Some courses may be accurate and comprehensive, but just not suited to your learning style. You can test out different options, such as courses with a lot of video content, animated infographics, in-depth articles, quizzes, real-time demonstrations, progress-tracking, and so on. 

However, the course should cover the basics of forex trading, including the main categories of currency pairs; the meaning of key terminology such as leverage and margin; basic chart analysis techniques such as candlestick patterns and support and resistance levels; how to put together a trading strategy; and how to manage risk. 

Some courses may require you to pay a fee or subscription once you reach a certain level, or wish to progress to the more advanced level of learning, so decide if you are prepared to do this. 

Try a free forex trading trial account

Once you have completed a basic training course and put together a trading strategy, the next step is to test it out in real-time market conditions. This is really important, because you will find that there is a sharp step up from learning the theory to putting it into practice. A free trial offers you a stepping stone between being a learner and making real-time trades.

Many prop firms such as FTUK offer a 14-day free trial, which provides a valuable opportunity to work with a live trading platform in simulated market conditions. You will gain experience of making quick and emotionally controlled decisions without the pressure of actually losing real money.

You can test out different strategies and see how all the theory you have learned works in practice. It’s also a valuable opportunity to familiarise yourself with the interface of the trading platform, so that you are not panicking or frustrated as you try to figure it out while attempting to make real-time trades on the live forex markets. 

If you perform well, operate within the rules of the prop firm, and hit profit targets, you can then consider progressing on the evaluation program. This involves another 14-day trial, for which you’ll usually need to pay a fee. During the trial, you’ll take one or two tests to allow the prop firm to assess your competence as a trader.

If you pass the test, some prop firms such as FTUK will refund your fee, and provide you with access to a fully funded account (meaning that you don’t need to invest your own capital, and any losses you make will be covered by the prop firm) with a scaling profit plan. 

If you prove that you can manage risk sensibly and make consistent profits, you will gradually be able to increase your account size and profit share up to 90 per cent. 

The best way to get the most out of your free trial is to treat it like a real account, establish a trading routine, and keep a detailed journal of all the trades that you make, including your justification for making them, and why you chose the market entry and exit points that you did. 

At the end of the 14 days, review your journal entries, and look for patterns in your least and most successful trades. This can help you to identify the strengths and weaknesses in your trading plan, and refine your strategies and focus on the tactics that are most effective for you. 

Engage with forex trading communities 

You can learn a lot about forex trading by engaging with forums and online communities. This will usually cost you nothing, and you will be able to share ideas, get updates on the latest economic data and geopolitical events that are influencing the forex markets, and debate the pros and cons of various strategies.

You may even be able to find a mentor, such as an experienced trader who shares their strategies and insights with you, or provides feedback on your own strategies and ideas. However, be wary of ‘herd mentality’, which can lead you to follow the crowd without making independent judgements about your reasons for doing so.   

Advice and moral support can be useful, but learn how to use it wisely rather than letting it feed into emotions such as feelings of competitiveness, inadequacy, pride, jealousy and so on. As we have already discussed, learning how to trade forex properly takes time and effort, and ultimately you will need to rely on your own judgement and emotional intelligence. 

Invest in trading psychology

Another important aspect of forex trading that you will need to master is the right mindset. This means being aware of the psychology of trading and how to manage risk well. New traders may treat this as an afterthought or something they will get around to as they gain more experience, but it’s important to consider it from the get-go.

Trading can bring out strong emotions, such as fear of losing and greed for bigger profits. This can subconsciously cloud your judgement and lead to biased trading decisions. Learn how to be aware of your emotions as you trade, and take time out if you begin to panic, feel angry, or sense that you are becoming overconfident or fearful. 

It’s yours for the taking

So, there you have it: it is certainly possible to learn forex trading for free. However, what you will need to invest is your time, effort and mental resilience. 

Be very suspicious of any online learning materials that promise you will be making thousands of dollars a month within a short period of time—this is unlikely to happen unless you already have a background in a similar financial field. However, there are hundreds of genuine courses and high-quality materials available for free, so take advantage of these. 

Have a clear-eyed and realistic approach about what you can achieve, and what you want to get out of your forex trading experience. It’s possible to combine forex trading with a full time job and other commitments, because the forex markets operate almost 24/7 and you will always find windows to trade in.

Note that the biggest New York and London markets are most active between 8 and 9am in the morning and 5 and 6pm in the afternoon. Therefore, you will need to be disciplined and prepared to stick to a regular schedule. 

However, maintain a good work-life balance and guard against burnout, so you will always be in the best physical, emotional and mental state to make good trading decisions. The opportunity to make good profits in the long term is yours for the taking, and you don’t need to risk any of your own money along the way. 

Knowledge is power, and nowhere is this more evident than in the world of forex trading.

Whilst all types of trading will require a wide knowledge range in order to be successful, passing an instant funding prop firm test to ensure that you can cash out your hard-earned gains requires a particularly wide knowledge base.

There are many sources to access this, from mentors to online accounts of what worked for other people, but books are the best way to learn.

With that in mind, here is a small selection of the many books available that can help boost your knowledge of trading forex.

The Little Book Of Currency Trading

Written by Kathy Lien, The Little Book of Currency Trading is the ultimate beginner’s guide of how to trade in the forex market, explaining the minutiae of opportunities available to traders of all levels of experience.

She explains the various types of strategies you can take in forex, from short-term aggressive day trading tactics to longer strategies that can help you to achieve success.

What makes the book so useful is how much it focuses on the fundamentals. It explains not just the common behaviours of currencies but also why forex markets behave the way they do.

This means that just beginners but traders at all levels can get something out of it.

Six Days In September

Whilst the last book focuses on forex trading in the abstract, Six Days In September chronicles the biggest forex trade in history and its short-term and long-term effects.

Many people know the basics of Black Wednesday when George Soros and Stanley Druckenmiller undertook a forex short sale so audacious it would later be claimed that the pair “broke” the Bank of England.

Six Days In September shows just how powerful forex is, and can be somewhat aspirational for just how effective the right forex strategy can be.

Whilst much of the book focuses on the aftermath, and how this event alongside the Maastricht Treaty would lead to sweeping changes in both British and global politics, it also highlights the power the forex market has and how with the right tactics forex trading can cause tectonic shifts.

Japanese Candlestick Charting Techniques

Candlestick charting is a fundamental part of many analytical trading techniques, but this particular guide comprehensively explains why candlestick charts matter and how you can interpret them to make the right decision in the forex market.

The best way to trade is to understand why people use the techniques, charts and tools they use to manage their portfolios, and the book on candlestick charts explains how they work, why they matter and how you can apply them to every possible market.

The candlestick method is far from limited to forex, of course, but understanding how people read financial charts is critical to success in trading currency pairs.

Forex Trading: The Basics Explained In Simple Terms

Jim Brown has an entire series of books on how to effectively learn to trade forex, all of which are highly recommended as a way to build up your skills.

However, the best choice for absolute beginners is his primer on forex trading, which covers all of the fundamental concepts you need, from how currency pairs work to the basics of trading 

psychology and why people who lack mindfulness struggle to make a profit in forex.

It is a good start for beginners, although naturally it is best used as a foundation to develop your own trading strategy, which the book also helps with.

Of course, there is further scope for analysis, and one of the greatest gifts of the Jim Brown series is that it has books available for forex traders at every level, so the basics can serve as a foundation for a much greater base of knowledge.

The Death Of Money

Despite its apocalyptic title, The Death of Money is a fascinating analysis of the forex market following the abandoning of the Gold Standard and the new monetary order that came as a result.

Much like how Six Days of September explained the most audacious forex trade ever made, The Death of Money explains through rigorous analysis how the forex market has fundamentally changed, particularly following the fall of the Soviet Union.

In some respects the analysis is dated, it only just picked up Black Wednesday, did not factor in the Euro and did not even consider that Russia would default on the rouble in 1998, which would itself create a financial crisis that would destroy Long Term Capital Finance and set the seeds for the Great Recession.

However, it also highlights the evolution from how money is managed and why forex has transformed as much as the currencies themselves have.

Forex trading has never been more accessible, thanks to the rise of prop firms that provide online access to leading trading platforms. However, it’s still a rather unknown quantity for the majority of people, who may be curious to know more, but have one very straightforward question to ask: “how long does it take to learn forex trading?”

As with so many things in life, the answer to this question is not so straightforward, and here we’ll do our best to explain the reasons why. For those of you in a hurry: the short answer is at least 12 months, but this is a big generalisation. You will find that forex trading is a continual learning curve, so trying to pin a timeline on it is not simple. 

Getting to grips with the basics

The first step to learning forex is to understand the basics. There are many free educational resources available, such as YouTube videos, blogs, and forums where you can ask questions and view discussions by seasoned forex traders. You can also sign up for an online course or webinar, or read books: whatever suits your learning style best.

It’s crucial to build a solid foundation of knowledge, or you will find it impossible to progress onto the more advanced stages of trading. The basic principle is straightforward enough: forex, or foreign exchange trading, involves buying and selling currencies in order to make a profit from fluctuations in the exchange rates.

However, the forex market is huge, fast-moving and complex, and influenced by geopolitical events and economic data releases. Beginners should spend some time understanding how major, minor, and exotic currency pairs work, and the basics of technical analysis techniques, such as reading bar charts and graphs. 

Fundamental analysis involves learning to interpret economic data and global events in order to understand market sentiment. Risk management is another fundamental aspect of forex trading. This involves being able to determine the optimum amount of capital to risk per trade, and where to place stop loss orders for the optimum risk:reward ratio. 

You should also familiarise yourself with key trading terms such as pip (a unit of price movement), margin (the minimum amount of funds in your account needed to open a trade), spread (the differences between the buy and sell prices of a currency pair), and leverage (borrowed capital in order to multiply the margin and control larger position sizes).

How long it will take to learn these basics will depend on your natural learning style: some people can easily absorb and retain new information, while others need to take longer. It also depends on how much time you have to devote to forex and what other commitments you have going on in your life.

If you are a quick learner with no heavy career or family commitments, then you can learn the basics of forex trading within a few weeks. Otherwise, it may take two or three months. The key is to take a consistent approach, otherwise you will forget what you’ve learned and will need to start over, which is frustrating and demoralising. 

The importance of enjoying the learning process

Another aspect to consider is whether you will genuinely enjoy the whole process of trading: do you get a buzz from keeping up with geopolitical events and analysing economic news? Do you like getting to grips with technical details such as interpreting graphs and charts? 

If you really have a distaste for the nuts and bolts of forex trading, and were only drawn to it because you heard you will be earning enough money to have six holidays a year or buy your dream home within a couple of years, then you are probably wasting your time. Forex trading takes dedication and patience to become successful. 

It may be a cliche, but forex trading really is about the journey and not the destination. This may not be what you want to hear as a new trader, particularly if your interest is purely making quick money rather than because you have any real curiosity about how the financial market works. 

At times, trading is tough and you will need to be tenacious and resilient. If you are purely in it for the money, chances are you will give up before you have a decent chance of making any. There is good money to be made in forex trading, but this will not happen overnight, and you will have to put in some consistent effort to get there. 

The most successful traders relish the whole process of constantly learning, researching and analysing the data, and are not driven by the thrill of making profits: in fact, this is a dangerous approach that will lead to risky and poorly thought out decisions. 

Developing your strategy

So, you’ve brushed up on the basics and you like what you‘ve seen so far. The next step is to develop a trading strategy. This will involve deciding how you will identify good trading opportunities (such as via technical or fundamental analysis, or a combination of both), and how you will manage risk. 

You should also decide which trading style to use, such as intraday trading, scalping, or swing trading. If you’ve already done the homework, this step should not take longer than a few days or weeks, depending on your time commitments. The next step is to roadtest your strategy with a demo account.  

The importance of a demo account

A big stumbling block for inexperienced traders who want to gain access to a funded account is, well, their lack of experience. They feel like a frustrated college leaver who can’t get a job because they don’t have previous experience, and don’t have previous experience because they can’t get a job. Often, their solution is to work for free as an intern. 

The solution for a frustrated trader is to sign up for a free trial with a prop firm. This will allow you to gain experience of trading in simulated live market conditions without the pressure of dealing with real money. This will allow you to test out your strategies, familiarise yourself with the layout of the trading platform and gain confidence.

You will feel more prepared when you do embark on live trading. If the trial does not go as well as you hoped, you will have lost nothing, but gained an insight into live trading conditions. Maybe you will decide that forex trading is not for you, or alternatively you can see it as an opportunity to work out what went wrong and raise your game. 

Variables that will affect your learning time

Your level of prior knowledge

If you have a background in finance or economics, you might find that you are already familiar with some of the basic concepts of forex trading and you will be more comfortable with the terminology and workings of the forex market. 

The amount of time you have for learning and practising

Obviously, the more hours a week you have available to devote to learning and practising forex trading, the faster you will progress. If you are combining it with other commitments, you’ll need to be disciplined and consistent in your approach.

The quality of your resources

While there is a lot of forex training materials available, not all of it is of high quality. Look for recommendations and reviews of the best educational resources, rather than just relying on whatever is turned up at the top of the search engine results pages. Getting involved in online forex communities can be beneficial for word of mouth recommendations. 

Seeking mentorship from an experienced trader or joining a trading community can be a very valuable way to seek guidance and feedback on your trading. This can stop you from repeating mistakes, and you may find that you are able to read the nuances of the market with more ease. 

Your trading mindset

Successful forex trading isn’t just about mastering facts and figures: it’s also a psychological game. Some people find they perform well in a simulated trading environment, only to let strong emotions take a hold of them and influence their decisions when it comes to trading real money. 

The only way to develop the emotional discipline and resilience necessary to be a good trader is by putting yourself in a live trading environment. Be aware of emotions such as fear, greed, overconfidence, excitement and the desire for revenge after a poor trading outcome. 

It’s impossible to completely detach yourself from your emotions, but you will need the insight and maturity to step away when you feel that they are interfering with your decision making process. This is a skill that all traders continually work on, so it’s impossible to put a timeline on it. 

So, there you have it: there really is no simple answer to how long it takes you to learn forex trading. It’s possible to understand the fundamentals within a few months, but the road to becoming a proficient trader who can make steady profits can take years.