How To Start Your Forex Trading Career
The foreign currency exchange market is a highly enticing one with the promise of many benefits. However, in order to reap these benefits you need to be prepared. It is vitally important you understand the industry, but it is even more important that you understand your position within that industry. Here are some steps you can follow to make the transition into forex trading as smooth as possible.
Why do you want to start trading forex?
The first step when beginning your journey on the foreign exchange market is identifying why you want to trade. There are various reasons why individuals choose to trade, but you must identify and examine yours. Some trade for the experience, while others trade to earn money. However, it should be noted that only 10% of all traders make a steady profit off forex trading.
This is not a ‘get rich quick’ scheme and should not be treated as such. Trading on the foreign currency exchange market requires dedication, commitment and a great deal of hard work if you wish to be successful. You should also remain within your financial limits. Never trade with money you don’t have, this just leads to debts and ill health.
What are your trading goals?
If you have decided to enter the industry as a forex trader, it is time to determine your trading goals. Do you want to earn a particular amount in the market? If so, how much do you want to earn? Are you interested in pursuing a career as forex trader? These questions are important as they determine the type of trader you wish to be.
Can you handle the risk?
Trading on any market is risky, but the high competitiveness of the forex market makes it far riskier than the others. In order to be a successful trader you must have an ability to handle this environment. Before entering you must know your risk tolerance. Mature traders state that you should not risk more than 2% of your capital on a trade as low capital amounts means smaller profits.
Do you know what you need?
Before you are able to enter the market and trade effectively, you need to learn about the different techniques involved. Information can be obtained through online training courses or forex tutors. There are certain institutions that teach people how to trade on the foreign exchange market. These courses will cover core skills such as analysing the market, creating a trading strategy, and how to calculate risk and money management plans. Once you have learned these skills you can begin looking at trading on the market officially.
Are you ready to trade ‘live’?
It is a known fact that trading live without knowledge of the market is a bad idea. However, it is also a bad idea to enter the market immediately after finishing your trading. Many mature traders recommend that beginners start with a demo account and work their way up to live trading. Demo accounts can be obtained via particular forex brokers. These accounts allow one to trade with real money in a real trading environment, thus is a perfect opportunity to develop your skills.
Once you have adequately developed trading skills, you can move to live trading. It is recommended your first account be small and low risk.