So you’ve decided on beginning your forex trading journey! Perhaps you’re a few weeks or a few months in now and you’re starting to make some sense of things. Regardless, it’s an exciting time and something we want to commend you for getting started! There is limitless upside opportunity in this space and we want to best set you up for success so you can capitalize on such opportunity. Here, we want to talk about how the first year of a forex trader typically goes and how it compares to the expectations that most have when they first start out. 

We’ve been able to gauge how the average new/beginner trader progresses in their skillset and results having now worked with nearly 10,000 students over the last 2 years here at Phantom Trading. We’ve noticed commonalities among those students in the questions that they ask, the wins they post, the challenges they face. In this article we’re going to break down for you what to expect here in your first year of trading forex.

There are a lot of things to know about the world of forex trading. It’s a fairly complicated field, with many factors and nuances that you can’t possibly learn in a classroom. You have to get your hands dirty and actually trade if you want to become an expert. That being said, there are some basic fundamentals that are useful no matter what type of trader you become.

In your first year of forex trading, you’ll likely be working under more experienced traders, watching them intently as they work and listening carefully when they explain their thought process behind particular trades or market conditions. As such, we compiled a list of the top five things you should learn in your first year of trading if you want to stay ahead of the curve and keep progressing in this fast-paced and lucrative industry.

You Don’t Have To Be A Genius To Trade Successfully

There is a common misconception among new traders that they have to be some kind of genius to trade successfully. They think of all of the trading movies they’ve seen and the stories they’ve heard of Harvard grads who became traders on wall street and made huge money because trading was in the family or they had an in somewhere. In truth, though, that’s not the case at all. Trading is a skill, and like any other skill, it can be learned. Sure, you have to have a certain level of intelligence to succeed, but there are plenty of intelligent people who fail as traders and plenty of not-so-smart people who succeed as traders. 

If you’re just starting out in the world of forex trading, you should know that no one expects you to be a wizard by any means. You don’t have to have a doctorate in applied mathematics or a degree in econometrics to successfully trade currencies. You simply need to have a growth mindset, be willing to learn through trial and error, and to follow a few simple rules like avoiding excessive risk and cutting your losses when you make obvious mistakes. With those things in mind, you can be successful as a trader, even if you think your IQ is low.

Mastering The Basics Of Technical Analysis

Technical analysis is the study of past price movements and trading volume to predict future price movements. Every trader uses some element of technical analysis when making trades. In fact, there are very few traders who don’t use technical analysis in some way. In your first year as a trader, you should make sure that you’re well versed in the basics of technical analysis. This includes understanding the past performance of different currencies and the commodities that you might trade, as well as the basic terms and tools used in technical analysis (all of which we cover in depth in some of our other articles here on the site that you can find here in our free trading resources section

There are tons of different resources you can use to learn the basics of technical analysis. You could read books on the subject, but there are a lot of great online resources as well. Many forex brokerages will also offer educational materials on the basics of technical analysis as well, but sometimes they tend to be a bit dated.

Risk Management Is Key To Your Success

The first year of your career as a forex trader will be crucial for establishing the risk management habits that will define the rest of your career. During this time, you should be making sure that you understand every risk that comes with trading currencies. You should also be assessing your risk tolerance and figuring out how much capital you should be trading with. In order to successfully manage risk, you should always be using stop-losses on your trades. 

A stop-loss is an order type where if hit, automatically exits your position in the asset you’re trading to control exposure to risk. This ensures that, even if you make a bad trade, you’ll only lose a predetermined amount of money on that trade. Most new traders surprisingly don’t use stop losses, which is like playing with fire. Risk management is key. Do not risk more than you’re willing to lose on a position. This simple process will become your best friend especially as you learn.

Remain Patient And Don’t Be Afraid To Fail

Forex trading is not an easy career. In fact, it can be extremely difficult if you don’t approach it correctly. For example, many new traders start off by trading major currencies with high volatility, like the EUR/USD and the GBP/USD. When the market is volatile, it’s easy to make mistakes and lose money. When you first start trading, it’s very likely that you’ll make mistakes and lose trades. That’s normal. In fact, it’s expected. What matters is that you learn from your mistakes and don’t become too frustrated as you start your career. 

Stay patient and don’t get frustrated when you make a bad trade, or even a string of bad trades. It’s normal to make mistakes when you’re starting out. The most successful traders in the world were all terrible at first. As long as you don’t give up, you’ll slowly improve. Here at Phantom, we have our students start out on pairs like EU and GU. We call these the “majors” or “primaries” and they’re a great place to start because they are high volume instruments. Focusing on just one or two currency pairs or indices from the very beginning will help you remain focused and not become distracted by the endless pairs and various instruments you can choose to trade. We want to avoid FOMO and remain laser focused on honing the skill especially in the first year of development.

Always Be Learning

Finally, as a trader, you should never stop learning. Whenever you can, try to talk to other traders or read trading books and take online programs to learn more about the industry. If you want to become a successful trader, you need to constantly be honing your craft and getting better each day. This comes through repetition. Simple as that. There is no getting around putting in the time to become great. 

Think about the best of the best in any field. They dedicate themselves to mastery of the skill required to become great. To join the top 1%, you must do as the top 1% do. This means backtesting your chosen currency pairs regularly. Applying for prop firm funding challenges as you develop and testing yourself in live scenarios that push you to execute under pressure. It may sound complicated, but the process really is not. One thing we’d recommend to help you progress faster is to join a program/community that has proven results. There are a few things to look out for when gauging which community to join. We’ve written another article covering how to audit various communities and how to choose the trading community that’s right for you, so be sure to check it out if you’re scoping out different trading courses.

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If you’re eager to succeed in your first year as a trader, and if you keep these five things we’ve covered above in mind, you’ll be well on your way to becoming a successful trader faster than most. We hope this has been valuable for you and has helped clarify what your first year will look like as a trader. 

Robert Castillo
FX Trader & Analyst
Writer & Editor

Rob is a funded trader from Toronto, Canada, and has been trading currencies, commodities, stocks, and cryptocurrencies for over 7 years. Outside of trading, he enjoys making music, boxing, and riding motorcycles.