Step 1 - Get Yourself Ready To Trade
In my experience, many traders fail to properly prepare to become a trader. A trader is a profession, one that many people have sought a college degree. As a trader, you have selected a work from home job. You'll need to be self-motivated, be a self-starter and enjoy working independently. Many have found that getting up in the morning and getting ready as if they were going to a job helps them get ready to get to work.
Step 2 - Look over your last few trades
A successful trader keeps a journal of their trades. In the beginning, you'll want to keep track of all of your trades. Be as specific as possible and track why you entered and exited a trade and if you were near support or resistance. As you keep a journal, you'll be able to identify your trading pattern. By identifying your pattern, you'll be able to recognize the same mistakes you have made in the past. You will also be able to recognize some trading trends, yours and the FOREX market's.
Step 3 - Fundamental and Technical Analysis
Technical analysis refers to anything that is related to price action. The price itself, formulas, patterns, etc. There many tools that you can use; different indicators and charts. Choose one and be consistent with the one that you use. Don't' use MACD one night and RSI the next. Also, be consistent in the length of your moving averages and don't switch between simple and exponential. Use what makes the most sense to you and don't over analyze. One tip: for sure use Fibonacci Lines.
Fundamental analysis refers to anything other than price action. In the world of trading our case it means news. I look to see what piece(s) of news are being released that day and from that information determine what kind of volatility to expect in the upcoming session. This also helps me to determine which support and resistance levels to expect.
Step 4 - Money Management
This step is all about setting up a good money management system. Choose how you want to increase your trade size and be consistent. Those who change their path day after day tend to experience failure.
This is often when traders begin trading beyond their level. The key is to not trade on a live account until you have consistently made money in a demo account. A rule of thumb is to have made a profit consistently for two weeks. And, it is not consistent if you made $9,000 one day but lost money the other 10 days.
Step 5 - Make the Trade!!!
Now you are ready to make your trade. There are a couple of things to remember. You have the done your homework and know what to expect and what to look for. It's important to be patient and wait for your opportunity. Once you see the opportunity, enter your trade and place your stop order immediately. Then, place your profit target.
Remember to keep your journal and you will gather very valuable information over time. This will help you to continue to improve your trading skills.