The popularity of forex trading is rising with more and more people joining the elite option of working from home. As a beginner, however, you might find it difficult to start trading and become frustrated and discouraged by pitfalls and hidden touches. What is the right way to start trading and what are the steps towards becoming successful in forex?
How to Start Forex Trading?
First of all, educate yourself. Forex trading is not easy and requires every-day education. You have to be serious and dedicate decent amount of time to understand the basics. I suggest reading articles, forums, blogs, e-books, sign up for forex courses or seminars, make new online and offline friends in trading world. You will need all the information and encouragement to pass the probation period of a new trader and start making a living with forex. Speaking of e-books, try not to fall for the paid-all-over-advertised e-books. There are enough quality free stuff.
Once you know the “theory” it is time to practice. Free demo accounts are offered by most of the forex brokers, so the next task is to find the “perfect” broker. Keep in mind that there are tones of average brokers, some are outstanding scammers and only few are reputable and trusted. And even though you will not deposit any real money yet at this stage it is wise to find the right broker from the start.
In order to avoid scammers, you will have to visit forums, read forex brokers’ reviews, search for brokers’ rating and ask advice from other traders. Whenever you seek an advice via forum make sure not to believe all the responses right away. Check out the profile of those who answer your question, when did they join the forum and how many posts do they actually have before answering your question “who is the best forex broker?”. Chances are that a trader with hundreds posts is honest and the recommendation is valuable while a user that has just recently joined and have less than 50 posts doesn’t know much, or worse, is just a representative of a scammy broker.
Once you have chosen the broker to join, open an account and get the trading platform. Some platforms are downloadable while others are web-based, some are user-friendly and others are more complicated suitable for professional traders. Before you start practicing with demo account make sure you are well aware of all the function and features of the trading platform. The last thing you want is to find yourself unsure where to click in order to enter or close a trade.
Most forex brokers offer demo account for a limited amount of time, let’s say 30 days or so. It is important to exploit this opportunity to the fullest and polish the trading plan and your forex strategy. Most traders I know recommend demo trading like mad for at least two months before you move to the next step – investing real cash.
At some point demo account will no longer be enough and the real trader instinct will emerge. The need to trade will bother you from the start of the forex experience, but there comes the day when you will actually be ready to take the plunge.
In most cases the trading platform will take you from demo account to the real account in the matter of seconds. The next question a trader might ask is how to make funds with the selected forex broker. There are quite a number of options when it comes to payment methods – credit card, wire transfer, checks and alternative online payment methods such as paypal, neteller, moneybookers and similar. Every forex broker offers a certain number of payment methods and it is up to you to find out which method is most suitable. Please take under consideration that some brokers charge a fee for withdrawing, for example. Make sure that you know all the terms and conditions of the broker before you make the deposit.
Speaking of deposits, this is the time when bonuses come in handy. Forex brokers today compete with each other providing different kind of bonuses, competitions, prizes and VIP services. Most favored are welcome bonuses which come in form of free money upon your first deposit. The amount money you get for free is calculated by either percentage or there is a fixed sum for a certain amount of funds deposited. For example, some brokers give away 10% of the deposited funds, others offer $100 upon a deposit of $300, another matches your deposit with 100% bonus.
When you start trading live it is wise to go slow and small. Don’t invest thousands in one go – try live forex trading with couple of hundreds first. Make sure to trade only the amount you can afford to lose and be ready to lose it! Mistakes are the normality in forex trading. It should not shock you that the results you get from real trading differ from demo account. It is all about experience and patience.
While getting your feet wet in forex, you need to work on the psychological issues as well. Most problematic features most traders have are greed and fear. It is your job to figure out the way to deal with losses, overtrading, missed traders, fear of entering a trade, fear of sticking with it and difficulty of following your own trading plan.
It is tough out there in forex land and only if you take it seriously, as a business, as a real profession, as a full-time job, you find a true trader within.