Everyone trying to start off trading is faced with the same dilemma – what’s the best way to learn the craft? The forex industry is full of controversies, misconceptions, and even pure lies. As you don’t want to fall prey to any of those, it’s critical to follow a thoughtful trading education path.
This article will overview all the various paths you can take in learning to trade and weigh their pros and cons so that you can get around easier.
Let’s get to it!
How do you learn to trade forex?
Most of the time, it’s best to rely on “formal,” structured ways to learn FX trading. It’s easier to digest basics (there are quite many) as you follow a curriculum step-by-step. The learning curve can even be improved further if you have a mentor. Of course, there’s usually a meaningful financial cost to it.
Alternatively, you can take it freestyle and learn yourself, which is possible nowadays like never before. The abundance of information can be a blessing or a curse, depending on your personal traits.
Formal ways
Here let’s look at the ways when traders are “taken by the hand” through forex intricacies.
Paid courses
You can find high-quality trading courses on the platforms like Coursera or Udemy. Also, many independent firms and individuals sell decent programs. The features of the paid courses include solid structure, helpful excel sheets, indicators, and other software, potentially saving you time designing those yourself.
The biggest benefit of a good course is access to the creator, enabling you to get some clarifications and feedback. Many products also offer exposure to the community of other students. In live chats, you can discuss trading concepts and ideas based on the common background, so the knowledge can soak in better.
Most of the courses are priced under $1000.
Make sure the product you’re paying for provides you with something unique that you can’t get freely otherwise. It’s been a recurring issue that courses contain only general basics that you can find for free.
Free courses
Usually, free courses only provide theory, often impractical and poorly structured. It’s better than nothing, though. If you take it slow and commit to some resources seriously, you can build a sufficient theoretical foundation for further growth. You may even consider taking a free course for the basics and if you want something advanced, go for a paid one.
Every reputed brokerage has some educational materials on its website. Aside from brokers, probably the highest quality free course is on babypips.com – it’s practical, well-structured, and fun.
Mentor
Here is the most efficient way to learn trading forex, yet usually the most expensive. The common and accessible way of mentorship is through webinars and live trading sessions. You can ask questions about the market in real-time, which is extremely valuable as you can learn how the professional thinks in various situations.
A rarer and rather exclusive mentorship is one on one. It works best because you can build a close relationship with the mentor and replicate their winning character traits, habits, and mindset.
Trading courses: pros and cons
Let’s some up the formal forex education by looking at the strengths and the drawbacks.
Pros
- Quality content and curriculum structure
- Accelerated progress with group learning and mentorship
Cons
- Risk of getting educational content that is accessible for free.
- The financial costs can be high
Self-education
You can also go freestyle and learn theory and practice yourself. Such a path can be suitable for self-driven, highly-disciplined people. Although, in general, it’s quite risky to gather all the pieces of the puzzle alone.
Theory
It can be challenging, in the beginning, to be exposed to hundreds of different ways to trade. The focus here is to find a method or philosophy you’re personally the most comfortable with. You shouldn’t choose something just because it worked exceptionally well for somebody else.
Books
Here is the traditional way to learn any theory. Books can help you the most with understanding trading psychology and abstract economic concepts. Surely, there are solid books on technical analysis too. However, it’d be best to study the basics like support and resistance and go straight to live charts to get a feel of it practically.
YouTube videos
Videos provide an interactive way of learning to trade. Whether you’re a visual or an auditory learner, you’ll benefit from watching quality forex videos.
You should find a channel that posts consistently. Make sure the blogger trades for real and mainly earns from forex profits, not views on YouTube.
Market observations and practice
Ultimately, you’ll be left one on one with the market, whether self-taught or not. So, why not practice taking full responsibility for your trading decisions from the beginning?
You can learn a lot simply by watching the price action in different contexts. You can get to know specific FX pairs and trading setups intimately as you won’t be biased seeing it the way others see it. You’ll also develop self-awareness and understand what to work on in your mental framework.
Live trial and error
Start demo-trading if you don’t have spare money for a small live account. Ideally, you should use a several hundred dollars balance to learn self-control when your capital is at stake. Your mindset and attitude to profits and losses will determine the quality of the decision-making.
Document your trades: gather your performance stats to know what works and what doesn’t.
Backtesting
Test-drive your system on the market history. It’ll show you any required tweaks you need to make. Also, through manual backtesting, you’ll set your mind to work in sync with your system, eliminating second-guessing. The backtesting results should be positive before trading live with a meaningful balance, proving that your approach has a positive expectancy.
Self-education pros and cons
Below is the summation of the two sides of self-education.
Pros
- Minimum or no investment
- The chance to develop higher self-awareness
- It promotes creativity
Cons
- It can take extra time and effort to find the right learning resources
- The risk of significant losses due to an immature mindset
- Generally, a longer path to consistent profitability
Conclusion
We’ve looked at two approaches to education in forex. If you have financial resources and want the result in the shortest time, go for quality courses and mentorship. However, try discovering forex yourself if you’re not in a rush and cannot set aside a few hundred dollars. Anyway, you can’t and shouldn’t always rely on someone’s opinion in trading, so being self-taught may help you be an independent thinker.
