October 18, 2013

The Currency Trading Experience Continuum

This article looks at the currency trading experience continuum and how to find the middle ground.

Currency Trading Experience

Currency trading is something that you need to have a combination of theoretical experience and practical experience.  When you start with currency trading you should consider what experience you need to gain and how this can be done.  You should also consider some of the dangers that you face when you sit on one end of the experience continuum.  The continuum will have theoretical experience on one end and practical experience on the other.

The Dangers of Theoretical Currency Trading Experience

All traders will need to have theoretical knowledge of the market before they trade.  The theoretical knowledge that you need to have will cover all the information about the market and how you can trade on it.  The primary danger of theoretical knowledge in relation to currency trading is that you do not understand the practical aspect of trading.

When you have theoretical knowledge of the market you are able to logically consider all the factors to trading.  You can calculate what you need to do on the market and what you are going to get in return.  However, you are not preparing for the practical aspects of trading such as the emotions that you will face.

Another danger of theoretical experience is that a theory that works on paper will not always work on the forex market.  Currency trading plans can work on paper because they are based on historical events.  Once you move this to the live market you could face problems as there is no guarantee that history will repeat itself.

The Dangers of Practical Experience

When you only have practical experience you will not understand the theoretical workings of the market.  This means that you are not going to understand the drivers that move the market.  You will only know about hoe to trade on the movement once they have manifested.  When you do not have the theoretical knowledge you will not be able to plan how you are going to trade.

If you cannot plan your trading then you are going to suffer losses on the market.  All trading that you do should be based on facts and this is something you could find lacking if you only have practical experience.

Finding the Middle Ground

To make the most of currency trading you need to be working in the middle ground of the experience continuum.  The middle ground is actually easier to get to than many traders assume.  The first step would be to complete forex training which should tell you all the theoretical knowledge that you need to trade.

Once you have the basic knowledge that the training offers you, you need to look at learning more about the trading that you will use.  You should look at strategies that you are comfortable with and tailor them to suit your trading.  The only way that you can be successful on the market is to have a trading strategy that you are comfortable with.

After you have all the plans and strategies that you need you should consider the demo account.  A demo account is a free trading account that you can get from the brokers.  These accounts allow you to gain the practical experience of the market without risking your money.



Get a free Forex PDF PLUS:

  • 14 Video Lessons
  • Free One-on-One Training
  • A 5000$ Training Account
  • In-House Daily Analysis
Become a forex trader!

Comments are closed.

Free PDF and UNLOCK website features