The Investor Diary Entry #77: March 2, 2025
Trading forex can be an exciting yet challenging journey. Before I started, I had many misconceptions about how the market worked and what it took to succeed. Through experience, I learned that preparation, discipline, and the right knowledge are essential for long-term success.
One of the reasons of creating this blog is to create a place where people would find information that would guide them into the proper way of establishing themselves in trading forex without having to repeat the same mistakes I and many traders made in this industry.
I am writing this article as if it was the first article in The Investor Diary. I am going back to establish the basis of trading as a business.
This is a diary, and I will continue to treat it as such, but I think there is a way to make this diary the go to place for a trading Forex guide.
Here are the 10 crucial things I wish I had known before getting into forex trading.
1. Personal Finance – Can You Afford to Trade?
Before diving into trading forex, I had to assess whether I could afford the risks involved. Trading requires capital, and losses are inevitable. If I didn’t have enough savings or a steady income, trading would have put me in financial jeopardy. Many beginners start with money they can’t afford to lose, which leads to emotional decisions and financial ruin.
2. How the Forex Market Works
Unlike the stock market, which has centralized exchanges, the forex market is decentralized. It operates 24 hours a day across different global sessions. Currencies are traded in pairs, and their value fluctuates based on supply, demand, and geopolitical events. Understanding these fundamentals was crucial before I could start seriously learning how to trade forex. Make sure to understand the difference between understanding fundamentals and its effects on the market, and trading fundamentals. Those are two different concepts and one of the things that I needed to know before starting trading forex.
3. What is Risk Management?
One of the biggest lessons I learned from any trading forex guide is that risk management is the key to long-term success. Without proper risk management, even the best strategy will fail. I established strict rules, such as never risking more than 1% of my capital on a single trade and always using stop-loss orders to protect my account.
After understanding Forex basics, this should the only area of concentration before any trading happens. If I knew this before I started trading in 2003, I would have been in a different place. It was only after 19 years that I understood its value.
We already created a series on this topic, to start to know how to learn risk management in Forex trading.
4. The Difference Between Technical and Fundamental Analysis
Many traders debate whether to rely on technical or fundamental analysis. Technical analysis involves studying price charts, trends, and indicators to predict future price movements. Fundamental analysis focuses on economic events, interest rates, and news reports. Many find that combining both gives them a clearer picture of the market. Personally, I stopped at understanding both and a particular news event could affect the market.
5. Trading Costs – Brokers and Spreads
Trading is not free. Brokers charge fees in the form of spreads, commissions, or swaps. Some brokers offer tight spreads but charge commissions, while others have wider spreads but no commission. I had to compare different brokers to find one that suited my trading style while keeping costs low. Before committing, I read multiple forex blog posts and broker reviews to make an informed decision.
Personally, it took me some time to understand how spreads are considered a cost. Until today, I cannot figure out if a zero-spread account with commissions is better than a zero-commission account with a spread. Just reading the sentence is confusing for me.
6. Forex Trading Sessions – When to Trade
The forex market runs 24/5, but not all hours are equal. Liquidity and volatility vary depending on the trading session:
- London session (most liquid, high volatility)
- New York session (overlaps with London, another prime time)
- Asian session (lower volatility, better for range trading)
Knowing when to trade helped me maximize profits and avoid unnecessary risks. Learning about trading forex during the right session can significantly improve trade outcomes.
Many traders prefer to trade when there is volatility, unlike myself as I prefer calm markets so as not to make rushed decisions. There is no right or wrong.
7. The Psychology of Trading – Emotions Will Ruin You
The biggest challenge in making money trading forex is not the strategy but controlling emotions. Fear, greed, and overconfidence can lead to poor decisions. I had to train myself to remain disciplined, stick to my trading plan, and avoid revenge trading after a loss.
Although I consider this factor as part of risk management, but its importance make me include here as a main pillar of trading Forex.
If you are interested to read the article it is titled Learn Risk Management In Forex Trading: The Psychology Of Risk
8. What a Trading Plan Is and Why You Need One
A trading plan is like a business plan for traders. It defines my strategy, risk management rules, and entry/exit criteria. Without a trading plan, I would be gambling rather than making calculated decisions. Writing and refining my trading plan was essential before I could learn trading forex effectively.
I have written several times about my final trading plan, but I am still making changes on it. Therefore, I am not going to refer you now to one of those articles.
9. How to Use a Trading Platform
Before opening a live account, I had to familiarize myself with my trading platform. Whether using MetaTrader, TradingView, or a trading station made by a broker, I needed to understand how to execute trades, set stop-loss levels, and analyze charts. Practicing on a demo account before trading live saved me from costly mistakes. If you’re about to start learning trading forex, take time to master the platform first.
It was only recently that I started testing out MT5. I used to use a trading station of a particular broker. Until now, I don’t know how to use many features on MT5, but at least I can make orders comfortably.
10. Forex is Not a Get-Rich-Quick Scheme
Many beginners. including myself in 2003, enter trading forex with unrealistic expectations. I learned that success requires patience, strategy, and continuous learning. The key to longevity is consistent, steady growth rather than trying to double my account overnight.
Final Thoughts
Trading forex is a journey that requires discipline, financial preparedness, and the right mindset. Whether you are following a forex blog or using a trading forex guide, understanding these 10 points before diving in will help you build a solid foundation. If you’re ready to start learning trading forex, take it step by step, focus on risk management, and treat it like a business rather than a gamble.
We intend to dive deeper into many of the above subtitles. As I said before, I am considering this article as the first foundational article of the blog. We are going to structure our articles from now on based on the fact that this is our foundational article from which we will expand into the different aspects of trading Forex.
The Investor
Sunday 2 March 2025
About The Author
I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second, as a place where I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links, I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.
For more detailed information on my affiliate disclosure please refer to the Full Affiliate Disclosure page.
Furthermore, this site is in no way or form giving any financial or investing advice, nor it is encouraging or discouraging people to buy or sell any financial instrument. This is a personal diary in which I track my own progress and share it for informational, educational, and entertainment purposes.
This article lays a solid foundation for anyone looking to start their forex trading journey. I appreciate the transparency in sharing personal experiences and lessons learned over the years. One question that comes to mind is: Given your experience, what was the single most impactful realization that changed your trading approach? Looking forward to more insights as this diary evolves!
Hello Herman, It was risk management. I was always confused about where to put my stop-loss. Risk Management rules cleared that for me, and created a more relaxed trading environment. With my risk management plan, trading became much more fun and enjoyable.
I think your first rule is the most important one. It is a bit like gambling, so if you go in without having money that you can afford to lose, then rather wait until you have some savings behind you, as it can be super stressful otherwise.
I never thought of you one point of knowing what the best time to trade is. I also think that this is something nobody should jump in blind to. First learn a bit about Forex before you take any risks.
Is there an online course that one could take to learn more about trading Forex that is not too pricey? This website is also very helpful.
Hello Michel, Thank you very much for your message. Unfortunately, until now I didn’t find an online course that I can recommend. But what I would suggest is to teach yourself about the following concepts.
– Support and Resistance
– Trendlines
– Price action.
This is regarding techincal analysis. But before jumping into any trading educate yourself and decide on your risk management plan. I humbly believe that I have written on the various elements of risk management in good detail that would help the diary reader to decide on a plan.
The Investor, your diary entry was an incredibly insightful and valuable read for anyone starting their journey in Forex trading, especially for someone like me who is just beginning to explore day trading and considering Forex as my first market. Your honest reflections on the misconceptions you had when you first started trading and the crucial lessons you learned through experience resonated with me deeply. The way you emphasized the importance of preparation, discipline, and the right knowledge for long-term success in Forex trading was truly eye-opening.
I particularly appreciated how you broke down the 10 essential things you wish you had known before getting into Forex trading. From assessing risk tolerance and understanding market fundamentals to mastering risk management and developing a solid trading plan, your advice covered all the critical aspects a beginner needs to consider.
Your personal anecdotes and examples made the content relatable and engaging, while your clear explanations of technical concepts like trading sessions, analysis methods, and platform familiarity made the information accessible and easy to understand.
What I found most inspiring was your emphasis on treating Forex trading as a business rather than a gamble, and your reminder that success comes from consistent, steady growth, not overnight miracles. This perspective shift is invaluable for anyone starting out in trading.
Thank you for sharing your wisdom and experiences in such an authentic and helpful way. Your diary entry has not only provided me with a solid foundation to start my Forex trading journey but has also given me the confidence to approach it with the right mindset and realistic expectations.
I am excited to dive deeper into the subtopics you mentioned and follow along as you continue to expand on these foundational concepts in future articles. Your guidance is truly appreciated, and I am grateful to have found such a valuable resource in your blog as I embark on my own trading journey.
Keep up the fantastic work, The Investor!
Eric
Your insights are making a real difference for aspiring traders like myself.
Hello Eric, Thank you very much for your detailed comment. I highly appreciate your highlights of the different parts of the article.
I am afraid that it will be sometime before I am able to continue on the subtopics. It has been a while since my last blog. My wife and I are relocating to another country. Once we are at least temporarily settled in I will resume both my trading and blogging.
Thank you again for the time that you took to read the blog post and to comment. Highly appreciate it.