I tried to activate my trading account with Pepperstone, it blocked my Master Card.
That made me go to the bank and fixing the problem took me several days. During this period, I settled down and started to learn about candlesticks.
They seemed scary but after I got more into it I found out that they were quite easy to understand. I started with Japanese Candlesticks. The technical analysis teaches you how candlesticks are formed and show price movements. You could identify the price action and make decisions for the short term direction of the prices.
They looked very profitable to me because they were easy to learn and had a systematic strategy. Of course, it varies from person to person how they read the Candlesticks.
They originate from the Japanese rice traders, then became popularized worldwide.
I followed tutorials on candlesticks charts, trend makers, bullish and bearish movements and more. Everything I learned is out there available for free. Putting them in practice helped me stay focused.
It felt like a type of meditation, what you gain is knowledge. It’s up to you how to use that knowledge for perfect practice. Another important thing I learned was when the buyers or sellers controlled the market price movements.
In different times, sellers and buyers were in a constant war of taking over the market. This way you could speculate what the price would be in the future. You need to know the direction that the price reversals are going to move.
The best part was learning about the trend that a trader joins or believes in following. You can take advantage of this by getting the best price. Knowing when a reversal happens, it helps you create your trend plan.
Also, the candles help you understand when the price is going to move in a direction that doesn’t interest you. As a beginner, I was tempted to go for the larger markets where a lot was going on. I had more opportunities to make a profit.
The biggest markets with zero spread available were EUR/USD, USD/JPY, GBP/USD, USD/CHF. Currencies’ value is relative, one currency is stronger or weaker than another currency. So for taking the relative value of one currency over another, I took some examples.
In January 2017 a pound would buy you around 1,22 cents. At the beginning of September, the pound had risen in value and 1 pound would buy you $ 1 and almost 32 cents.
In Forex, what matters is the value of one currency versus another. For some people, it might be confusing to know what are they buying if they press buy for a currency.
Okay, I get it, in the beginning, it was confusing for me too. To do this I had to go on the platform and see what direction was I going to trade. So if you buy a specific currency it means that the price you are investing in it is going to move up. If I want to profit from it, I would have to sell the price at the moment it will move down in the direction. Easier said than done, right?
My advantage is that for any profit or loss I will learn something new on building my strategy.
There are many ways of trading. You can be a long term position trader or a daily trader, or you can be a scalper. With sculping, you are looking for small profits many times a day.
For scalping, you would need a strict exit strategy. You can lose all the small gains that you have made so far. It is necessary to have the right tools required for this strategy to be successful.
How Scalping Works
A scalper strategy intends to make small profits as possible without having losses. This is a mindset, optimizes positive trading results and helps increase the size of winning trades.
Increasing the number of winners will bring good results. I learned that smaller moves are easier to get and also more frequent.
Knowing this can help me create a style of trading. Every trading system can be used for scalping. Scalping can be seen as a risk management method. Any trade can be turned into a scalp and can be executed on both long and short sides.
3 Ways to do Scalp Trading
- The first type of scalping is when a scalper tries to capitalize over the spread.
- The second type of scalping, purchasing a large number of shares and sell them for small gains. Usually measured in cents.
- The third is the traditional trading method. There you open and close operations as soon as possible.
I still was insecure about trading for real. This is why to get my feet on the trading world I created a demo account.
Why a Demo Account?
Well to get used to the trading platform of course. I was entering a realistic environment of trading. Everything looked like the real deal but it had no risk involved. You could try again and again practicing yourself.
My demo account had a balance of $10000 virtual money available for trading. I created 3 demo accounts surprised I could still use all them with the mt4 platform. So at this platform, you could create as many demo accounts that you wished.
I started to be familiar with market orders, time frames, the impact of news on trading and others. Nowadays brokers will provide you demo accounts. You can explore with no fear like I did, mistakes everywhere. The bad part of it is that most people don't feel that emotional devotion with no real funds taking place.
This brings some differences that we need to know before trading. Demo accounts not always follow exchange rates that are on real accounts. The price feed, bid and ask can be different on the demo account with that of a real account. Spread usually is fixed on the demo account. Spreads on the trading accounts can increase your trading costs.
Psychology on the Demo Account
Leaving aside these execution orders, price feeds and other factors, the demo account affects the psychology of the trader. Knowing that there are no risks involved changes everything.
Demo trading never triggers emotions and can lead you in over-trading. I realized it when I started to use my demo account. Imagine doing something all day with no profit. Boring right?
I have heard that many traders are very good at demo but start losing once they trade with the real account. Our actions have consequences, this makes life beautiful. Everything we do will leave a mark somewhere. It depends on your persistence to leave something strong and meaningful behind.
Practicing demo trading is like living in a virtual world. Never experiencing real action will create a large vacuum of unknown consequences. That one moment will affect our real trading.
Overtrading will never prepare you for a risk management plan. You will not need to fix your mistakes, you would rather invest more virtual money on the demo account.
Did I get any benefits from my Demo Account?
Everyone makes money using the Demo Account.
Demo Account still is the best method to get started with trading. This is the biggest advantage of Demo trading. It helps you place your first steps on trading.
Demo Accounts can be used even to create profit strategies for the real account. With Demo, I also got familiar with the Pepperstone platform and this helped me a lot. Another advantage of the Demo Account was learning different orders like buy stops, sell stops, buy limits, sell limits and others. If you will ever invest Forex, start that with the demo account to get the trading basics. Don't forget that Demo and Real accounts have different executions.
Not committing makes Demo Accounts inferior to Real Accounts. After we get confident to move on from that, it is time to risk some real money.
Scalping can be very profitable for traders who decide to on making small profits. This is the reason why this strategy is popular among many types of traders and suggested to me a lot at first.
Trading is not about making money fast. First, you have to form healthy trading habits with strong risk management rules. This way you will only deposit money that you can afford to lose.