August 31, 2021 6 min read

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Forex trading can be a highly profitable way to compound your money. When you trade in the forex market, there are no restrictions on what kind of assets you buy and sell or when the trades happen. It is a simple way for people looking to get into trading at first glance without any overheads and low starting costs as it doesn't require purchases like stocks do; all thats required is that you sign up online and start trading.

Although forex trading can be seen as a high-risk, speculative endeavor, there are many potential benefits such as the ability to hedge against fluctuations in your local currency and make money on global markets regardless of where you live or what language you speak. It's important for beginner traders to not only understand how forex works but to have a proven rule-based strategy that beginners can pick up and execute with ease, says Deflorio.

Check your emotions at the door

Deflorio says after coaching 1,500-plus students, Successful traders need to understand that trading is a game of probabilities. It can be easier said than done when it comes to controlling our emotions, making trading decisions from a place of sound judgment, and staying detached from the outcomes of each trade.

If you are new to trading, one of the most valuable skills to learn is emotional intelligence, where you have a strong ability to understand and manage your emotions. Stay calm and composed, avoid revenge trading or impulsive trades, and ask yourself if you are listening to your heart or head.

Bestselling author Jack D. Schwager interviewed dozens of top traders across most financial markets. In his book Market Wizards: Interviews with Top Traders, his findings from his interviews boiled down to the same essential formula: solid methodology plus proper mental attitude equals trading success. This is the exact mindset that Deflorio and his company Onyx Forex stand by. Given that emotional responses are a natural occurrence in human biology and psychology, no forex trader is immune to them. By having enough awareness, you will learn not to trade out of emotions such as greed, fear, ego, or euphoria as it can come with devastating financial effects and leave you feeling nothing but discouraged.

Seek guidance to avoid costly mistakes

Having a teacher, mentor or guide has been the backbone of many successful careers for generations. When you first begin to explore the currency market, you will stumble across many free resources such as courses, programs or YouTube tutorials. After realising you may be left with more questions than answers, you may find yourself asking yourself should I invest money to learn how to trade?

Stanley Druckenmiller was mentored by George Soros and is now a billionaire hedge fund pioneer. Paul Tudor Jones was mentored by Eli Tullis and is now another billionaire hedge fund manager. It goes without saying that in order to not only grow, but grow at an exceeding rate, guidance from an expert is necessary if youre in it for the long term.

Deflorio, founder of e-learning platform Onyx Forex Trading, sees a gap in the education market for beginner traders, stating, Because there is a massive hole in the industry for beginners, the learning curve is simply portrayed as being too long and too complicated. When we cracked 500 global members, this is when I realized that there is a massive market for beginners who want guidance and results without being promised a broken dream. Deflorio from Sydney, Australia has profited over 370k trading throughout the global pandemic through practicing what he preaches to his customers, hundreds of whom have been able to replace their weekly incomes at their traditional jobs and start a new career in forex trading.

Compounding growth

A compounding growth forex strategy is a gradual capital growth strategy that allows you to turn your earned profits into further profits, similar to a snowballing effect. While this strategy is preferred by some traders, many dont have the patience to implement this kind of long-term strategy but Deflorio from Onyx Forex Trading says this is the most crucial element needed to turn a small initial capital into six figures.

American investor and CEO of Greenhaven associates, Ed Wachenhein says "Compounding is powerful. Warren Buffett did not become one of the wealthiest men in the world by suddenly striking gold in a single highly successful investment, but rather by compounding the value of Berkshire Hathaway at a 20 per cent or so rate for 45 years. If an investor can achieve an average annual return of 20 per cent, then, after 45 years, an initial investment of $1 million will appreciate to $3.6 billion."

Deflorio also uses a compounding approach in his trading strategy, explaining, We realized early on that if we could help everyday people simply mimic our working strategy and break it down in a simple and easy to understand way, we would naturally grow the business. A seemingly small or insignificant event can have an astoundingly large impact if it happens over and over again, as proven with Deflorios results as well as those with his customers.

The forex market is the largest financial market in the world, larger than the stock market, with a daily volume of $6.6 trillion, according to the 2019 Triennial Central Bank Survey of FX and OTC derivatives markets. Given the high liquidity of the forex market, meaning it can be easier to trade than other financial instruments, it is becoming increasingly appealing to those, including myself, who are looking for a lucrative way to earn money from anywhere in the world, with nothing but your laptop and WiFi.

Deflorio has been involved in the forex market for over five years and his company Onyx Forex Trading are the market leaders in beginner trading education.

Note: Forex trading is subject to risk and readers should do their own due diligence. Entrepreneur Media does not endorse any such investment.

Read more from the original source:
Here's What You Need To Know Before You Start Trading - Entrepreneur