You might’ve heard it from a friend or relative that does it, maybe you have always enjoyed following the markets and think this might be a good way to put that into practice. Getting started in Forex trading can be exciting, scary and interesting. With all the information out there though…where do you start?
This article will point you in the direction you need to go to find information, news and even maybe a little insight getting a start in Forex.
Learn, Learn and Learn Some More
If you are bookish type, then you are going to love Forex. Trading is all about knowledge – markets and the products derived from trading on the markets are complex. Luckily when it comes to Forex trading the internet is a sea of information. A great source especially for new traders is Babypips; not only does it offer market tools, but also a relatively extensive learning material.
Most brokers also offer an extensive library of educational material for traders. This includes ebooks, articles, and if you aren’t very bookish, then you can also watch videos or listen to podcasts.
After you’ve spent a while reading and studying Forex trading you will undoubtably get an itchy trigger finger and you can temporarily satisfy that itch with a demo account. This will allow you try out what you learned without actually risking your money.
It is important here to note that trading live and trading on demo is very, very different. The most significant difference is lack of emotion, emotions which have been known to negatively affect trader’s success. Greed, fear, revenge and ego all come into play when you are trading with actual funds. An example of greed is when a trader holds a position until it starts reversing, losing more than they intended. Fear is when a trader doesn’t take full advantage of a trend exiting too soon. Revenge or revenge trading is when a trader impulsively tries to recover losses. Finally, ego is when a trader is experiencing a winning streak and making reckless trades, resulting in losses.
You’ve studied hard and proven consistent returns on demo. Are you are considering going live? First you need to check a few things:
• Do you have a trading strategy – are your consistent returns based on that strategy and are those returns long term? It’s easy to get excited and consider yourself ready to put real money on the line. The minimum consensus amongst professional traders is you should have at least six months to an entire year of positive, repeatable funds before you start risking your money.
Choosing a Broker
• Have you chosen a broker? This can be an arduous and involved process, there is a myriad of broker comparison websites, forums and honestly noise when trying to choose the right broker.
o Make sure they are regulated. This is relatively easy to confirm through the regulators website. Never take an anonymous website’s word that “hey I’m regulated, no need to check”.
o Fees, this includes deposit and withdrawal fees, commissions and spreads. Make sure you know every single parameter that could potentially cut into your bottom line. Most credible brokers will not charge you to deposit or withdrawal, so if the broker you are looking at does – make sure there aren’t any other hidden fees.
o The technology solutions your broker offers can either facilitate or inhibit your trading. For example, if you are a type of trader that is constantly on the go a trading app will probably be extremely useful. If you like using MT4, obviously you will need to work with a broker that offers that.
o Reviews are another great way to gauge the credibility and level of service a broker offers. Trustpilot is a great source of independent reviews.
• Not a lot of articles talk about depositing methods when deciding which broker to trade with, but it should be a significant consideration. Will use your trading activity as augmented or primary income? Do you need to deposit and withdrawal frequently? Something some traders overlook is that although your broker may not charge you fees to deposit and withdrawal – your deposit and withdrawal method might. Also, different deposit/withdrawal methods have different processing times. For example, a bank wire may take even up to 10 days where certain credit card processors (like Mastercard or Visa) may completely process a deposit or withdrawal within 24 hours.
Now that you have information, practiced and proven your track record and chosen a forex broker – you can participate in the largest and most active market in the world. Stick to your trading strategy but remain flexible and remember to trade within your means. Overleveraging has been repeatedly cited as a sure-fire way to blow your account.
Start out slowly, this will give you a chance to acclimate yourself to the psychological effects of trading live, hopefully meaning your trades will be more successful.