A journey of a thousand miles begins with a single step. How to ensure that you are off to a good start when embarking on your Forex trading path? In this article, we are going to talk about three major steps you should take if you wish to start trading in the foreign exchange market.
Perhaps, you have already come across expressions like “Forex quotes”, “currency pair” and “trend” but don’t know what they actually mean. Now, what about pips, flat, stop loss, take profit, bulls, and bears?
Forex trading is a complex system that has its own concepts and rules. So, you cannot start making money there without learning the basics. Your task is to understand how the international exchange market works, who its players are, what factors contribute to price changes and how to predict whether the exchange rate will go up or down using different types of analysis.
“Ok, but where do I acquire this knowledge?” you may ask. Fear not. Forex webinars, books on trading or face-to-face training courses can help you with that. There are both paid and free training solutions, so even if you are cash-strapped, you can still find a suitable option that suits your needs best.
For example, Gerchik & Co offers free training with a mentor bot. What you do is basically take online classes with an automatic assistant, complete your home tasks, and explore additional content covering each topic.
1. Do not rush. You can acquire basic knowledge needed for Forex trading in about 2-3 weeks. However, if you find certain topics particularly puzzling, make sure to get to the bottom of it no matter how long it takes. It’s okay if your training lasts for a month or two. Your goal is to earn consistently in the financial market, and not just check training off your to-do list.
2. Feel free to ask questions. If you are studying with a mentor, do not hesitate to ask him or her questions whenever something is unclear to you. Professional traders, who are now mentoring newbies, have once started from scratch too, so they know what it is like and will be happy to help.
If you are learning to trade on your own, make sure to interact with traders who have more experience. You can do that on forums, in social media groups and messenger channels.
This stage is no less vital than the previous one. Your main goal here is to find a credible brokerage company. Forex is a place where brokers act as intermediaries between traders and the foreign exchange market. Everything, including the profitability of the deals will largely depend on the trading terms and conditions offered by the brokerage company.
When choosing a broker, make sure to check the size of the currency spread (the smaller it is, the better), the number of trading instruments available, the size of leverage, replenishment and withdrawal methods.
Before you actually start trading Forex, you should first put your skills to the test using a demo account. This option is offered by almost all brokers. The only difference between the demo and the live account is that you trade virtual money and not the real funds.
With the demo account, you can trade the same way as you would with real money. Make trades with any currency pairs, and if you make a mistake, this won’t have any financial consequences, since the losses are virtual but so are the profits.
Using the demo account, you can:
It stands to mention that a strategy is a key to successful trading. This is what determines your trading behavior. Trading strategy (TS) tells you when to open and close long and short positions, where to place stop loss orders in order to protect the trade from the risks, what leverage size to choose, etc.
To choose the right TS, you need to decide on the trading approach, whether it will be short-term, medium-term or long-term trading. The newbies typically opt for the short-term intraday trading which is a great choice.
With Forex intraday strategies, beginners can use both fundamental and technical market analysis and make well-considered trades with fairly quick profits.
When you are finally ready to transition from the demo to the live account, you will need to choose the size of the startup deposit you are comfortable with and can afford to trade.
Another essential skill you need to master in the course of trading is to control your emotions. Below are trader’s biggest enemies:
Try to steer clear of these dangerous emotions and you will have a long and successful trading journey in the foreign exchange market!