Stepping into forex trading calls for knowledge, insight, and above all, a comprehensive understanding of the market technicalities. Irrational but prevalent expectations might grip you, especially if you are a newcomer who is just starting out. Here, researching first is the best practice to ready yourself for a better future as a triumphant trader. This article is all about how you can start, and what are the factors that might influence your career. Read on to find more about how to take the first step and proceed in the right direction. So, let’s dig in.
1) Research and Learn
Becoming an astronomer means you need to learn about the stars. Becoming a doctor means you need to learn about the human body. And becoming a forex trader simply means that you must learn about trading currencies. The following are some particular areas that you must focus on:
Understanding the Foreign Exchange Market:
The basic understanding of the foreign exchange market holds paramount importance when it comes to forex trading. It will help you learn the characteristics of the market and have a clearer picture.
Learning the Forex Trading Mechanism:
Compared to other markets, forex trading has its own intricate methods. For instance, you have to learn everything from the order execution to the price quote mechanism, which might take some time.
Acquire Skill in Technical Analysis:
Deciphering the price fluctuation is an art and you must master this skill if you want to become a noteworthy forex trader.
Not just the technical but also the fundamental analysis of the market is essential, which includes analyzing the trend, employment rates, interest rates, etc.
2) Consider Trading as Your Business
This may sound ambiguous, but let’s make some sense out of it.
Starting Capital Matters:
Have you ever wondered why so many startups fail right after stepping into the market? Well, that is because they lack the sufficient resources needed to initiate the trading business. You would be needing money to make tons of more money — not to mention, having sufficient funds can help you cover losses and move forward without sinking deep into a financial mess.
Devise a Trading Strategy:
Without an effective trading strategy, your business wouldn’t flourish, and you won’t be able to pinpoint profitable opportunities. You can devise as many strategies as you like, but at least have one at your disposal. And with the accurate implementation of your plans, your chances of success will rise dramatically.
Test the Trading Plan:
If a certain plan looks good on paper, doesn’t mean it will prove as good as initially anticipated. So, you must put the theories to test before the final implementation. Now the question is how do you test a trading plan? There are plenty of tools such as Trading View that helps young traders to chart and screen their stocks. It is an excellent tool for researching and putting your trading theories to test. If it seems feasible, you can move on to the next step.
Selecting a Forex Broker:
You can’t just select the first name that pops up in the Forex Broker list as you can get tricked easily. To choose the right forex broker, you can either look into the company’s regulation or its comment section. The latter isn’t a very trustworthy method, considering people often blame the companies for no reason when they suffer a loss.
A Trading Journal Helps:
Being able to track and measure your performance is essential because how else can you analyze the record? It will help you play on your strengths and eliminate the weaknesses that can prove harmful to your career.
Always Have Long-Term Goals:
If you are just starting out, it is natural that you only hope for small profits. It is indeed wise, but a limited vision may hinder your progress and you will be stuck on the same level. If you want to be as successful as the giants of the industry, they will be in your best interest to have a long-term vision — but not unrealistic.
3) Be Responsible
If you want to keep growing, learn from your mistakes and shortcomings. Blaming the company in order to shift the burden off your shoulders will only hurt you in a way that you might not understand at first. For example, if you have made a mistake or devised a faulty trading strategy, the responsibility is yours and yours only. Accepting it will help you learn and grow, allowing you to take precautionary steps the next time you are in the same position.
Remember that no matter how successful you become, there will always be a chance of error and loss. To make sure you don’t go down that path again, you must take the responsibility rather than shifting the blame.
4) Use the Demo to Its Fullest
After absorbing all the knowledge, you may think you are ready to hit the live market. But it would be better to test your skills at the demo version first. Most of the companies provide demo accounts for the users to test theories, contract strategies and learn the system. Play with the demo account for a few weeks, and when you have gotten the hang of it, you can move on to the live version.
5) Sign Up for a Live Trading Account
Let’s get one thing straight; there is a lot of difference between live and demo trading. With the former, you have to deal with the persistent stress factor. Therefore, if you have performed well on a demo account, it doesn’t necessarily mean that you will do fine with a live trading account. The key here is to start from little, get experience, and gradually increase your investment.
Over time, you will be able to manage the stress efficiently and come up with smart strategies to pull off a successful trade. Once you have grown considerably enough, you can move on to expanding your business and put in a good deal of money.
Interesting Related Article: “Forex Trading Basics for Beginners“