Many wish to earn money from the forex markets, but very few who start trading forex actually take the time to do all the preparatory work required to be successful profitable traders. Forex Trading – Step by Step: Part I: Get yourself a device (an internet enabled mobile if possible) that is always on. A laptop will do as long as you have internet access.
Once you have your device ready, the first thing to do is to decide what currency pair or pairs you are going to trade. This decision depends on the length of time you plan to trade and the amount of capital you intend to invest. For example, if you plan to trade for five days, pick a currency pair that you know nothing about. Your trader training may advise against trading the GBP/USD pair, but if you are a conservative investor you may decide to go with the EUR/USD currency pair. You will be trading currencies, so it is better to know something about the market before you get started.
Your trader training will instruct you how to pick a profitable currency pair. You will also need a good entry and exit price target, and a good exit price target as well. The combination of these criteria will help you determine when to enter a trade and when to exit a trade. However, there is another critical piece of information you will need to know. The only currency that you can trade for five days is the USD/JPY.
If you are going to use an online retail forex trader account, you will need a broker. Some online brokers offer an instant trading account. You should take advantage of this option. You may have to pay a higher fee, but using an instant account is much faster than taking a regular five-day vacation from your job. Even if your broker doesn’t offer an instant trading platform, at least find one that does and use it.
The next critical piece of information you must know is whether you want to use a mini, standard or social trading account type of account. Mini accounts are used by smaller traders, usually no more than four traders, who have decided to open a mini account to reduce trading costs. Standard accounts are ideal for larger traders who may need to access their account often and who anticipate trading frequency of several times per day.
The third critical piece of information you need to know is how to find the best forex broker account type. The best way to find out who offers the best forex broker account type is to read reviews and participate in discussions on forums. Large communities can be an excellent place to get honest reviews. In addition, forex brokers usually offer demo accounts. It is recommended that you try out a demo account to see if you like it before signing up for a real money account.
The fourth piece of information you need to know is whether the broker charges a minimum initial deposit to start trading. Most brokers will require an initial deposit before you can start buying and selling accounts. If your aim is to minimize your risks, you should consider a smaller initial deposit. If you want more trading opportunities, you can increase your initial deposit.
Finally, it is very important for new traders to understand how markets work. When most new traders hear about what is happening in the financial world, they usually think that it is pretty complex. The reality is that the Forex markets do not change that much on a daily basis. However, if you know a little about the market, you can learn which currencies are being traded and which ones should be avoided.