Forex trading is an interesting thing to do for many people. Sadly, only a very small percentage of people who get into trading make it. Part of the reason for this is that many people don’t like taking the long route to success.
Here are the five steps you should take when becoming a forex trader.
Find a Good Forex Broker
Finding a good and credible broker is very important. Ideally, you want a legal broker who is regulated by top financial regulators. This will ensure that your money is safe. In the past, many traders have lost money by dealing with unregulated brokers. You also want a good broker with innovative solutions like Deal Cancellation by Easy Markets. You want one who has a proven track record and one who provides exceptional support to traders.
Learn About Trading
You should now work to learn more about trading. Fortunately, there are a lot of materials in the internet that will help you achieve this. There are free websites that teach you how to trade and all the concepts you need. Further, there are many books you can download for free or buy that will help equip you with the skills that you need. Also, there are many videos you can find in YouTube that will help you in this. At EasyMarkets, we strive to equip our traders with all the information they need by providing materials and free webinars.
Use the Demo Account
As you learn the theoretical concepts, you should now start using the free demo account provided by the broker. This demo account has virtual money and live data that will help you simulate the trading.
As a rule, you should fund your demo account with the exact amount you intend to start trading with. For example, if you intend to start trading with $5000, you should fund your account with this amount. This will help you trade with the demo account as you would with your live account.
Another rule is that you should use the demo account as you would with your live account. You should feel the pain when you lose money from your demo account.
Create a Trading Strategy
In your demo account, you should now create the trading strategy that you will be using when trading. There are many trading strategies you can try. They range from simple strategies like scalping to complex strategies algorithmic trading.
You should spend a lot of time on this step because it will make or break your trading career. Experts recommend that traders should spend between 3 and 6 months testing and perfecting the strategy.
Finally, after finding a good broker and creating a good trading strategy, you should now fund your account with real money and start trading. In the early days of your trading, you should open tiny trades, based on your risk profile. Experts recommend that you should never risk more than 3% of your account per trade. As you go on and improve your skills, you can adjust your risk appetite.