Forex trading is not something exclusive reserved for a band of experienced traders. It can be an interesting vocation for many, including newbies. It is one of the most challenging and rewarding careers. However, only a small percentage of people are interested in trying their hand in forex trading. Most stay away from forex trading because they think it takes some special talent to be successful in forex trading and it is beyond them.
But the truth is that with a little preparation and a lot of hard work, anyone can enter the wide world of forex trading. What’s more, if you play your cards right, you can be a successful trader in the forex market. Even so, people do not prefer to get into forex trading because it takes a long time to learn the ropes.
Key Points to Remember:
- Keep up to date with current trade markets and stay informed with global current affairs
- Always establish a stop loss while trading
- Set realistic expectations
- Get comfortable with losing
- Never invest more than you can afford to lose
- Don’t trade too frequently
- Be strategic about the volume of trade
How Can You Become a Successful Forex Trader?
Regardless, if you wish to become a successful forex trader, you can become one. Here, are the five steps you can follow to become a successful forex trader.
1. Find a credible forex broker
The first step towards your journey to successful forex trading is finding a good, credible broker.
You must choose a reliable broker. Make sure that you engage a legal broker regulated by top financial regulators. It would make your money safer and less susceptible to fraudsters. There have been several instances where traders lost their money because they chose unregulated brokers.
It would be a good idea to choose a broker who offers you innovative solutions and support. Choose someone with a proven track record and who is known to offer the traders exceptional support and facilitates better trading practices.
2. Understand the trading process
You must learn about trading. You should make it a point to understand the process thoroughly.
Although you must have a basic idea about trading even before you chose your broker, it is imperative to get a thorough knowledge of trading once you engage a broker.
Luckily, currently, there are numerous avenues you can gather information from. The internet has a lot of resources available at the click of a button. You can also find websites that offer free courses and materials, or which teaches you how to trade, along with all the concepts you need to know.
Furthermore, you’ll find several e-books and guides that can be downloaded for free. You can use all these resources to learn about trading and sharpen your skills.
If reading is not your forte and you would love someone to show you how it is all done, several videos on YouTube can guide you through the process. You can sign up for free webinars and interactive sessions conducted by subject experts too.
3. Utilise the demo account
Once you have mastered the theory, it is time to test it. However, it would be foolish to jump right into the forex market as soon as you think you’ve mastered the theoretical aspects.
Instead, you should start small by using the free demo account provided by your broker. The demo account offers you virtual money along with the live data so that you can get a simulated market condition to try out your trading skills.
In this context, it is better to start your demo account dealings with the exact amount of money you intend to start actual trading with. For instance, if you plan to start your forex trading account with $5000, you should use the same amount when you use your demo account. It will help you use the demo account in the same way as your live forex account.
Furthermore, you should consider the demo account as you would your actual live account. It means that if you lose money from your account you should feel the pain the same way you would if it had been your live account.
Read Also: Can You Start Trading Forex With Just $100?
4. Establish a trading strategy
While practising with your demo account, you should create and establish a trading strategy for you to follow when you use the live account. You can try out some of the strategies and see what works for you.
It is not necessary to follow just one strategy. You can use a mix of strategies to suit the situation and find what works best. Sometimes simple strategies like scalping would suffice and at other times, you may have to use complex strategies such as algorithmic trading.
An important thing to remember is that you should spend as much time as possible on creating your strategy. This is what will eventually make or break your forex trading performance and career.
It will take you sometime - from three to six months in the minimum - to test and perfect your strategy. Anything less than that is highly unlikely to deliver the desired results. So, don’t be impatient and rush through this step. Instead, be thorough and take time to perfect your strategy.
5. Begin live trading
Once you have perfected the strategy, you can proceed to the final step. It is now time to fund your live account with real money and start trading in real. Again, don’t be over-ambitious and get carried away.
In the beginning, you should open tiny trades, according to your risk profile. It is a golden rule not to risk more than 2% of your account per trade. Also, never trade with money you can’t afford to lose.
Once you get the hang of things and improve your skills, you can adjust your risk appetite and trade accordingly. Even then, it is important to keep a level head and not to make emotional decisions.
You should always remember that no one can enter successful trading 100% of the time. Be prepared to lose and learn to cut your losses short. Do not follow other traders blindly. What works for them may not work for you. Stick to your strategy and make your moves accordingly.
Once you've started forex trading, you will get ample opportunities to improve and hone your skills. Even in the trades that you lose, you’ll learn some valuable lessons. The key to success is perseverance and hard work. If you deal sensibly, you will soon become a successful forex trader. and earn profits.
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