How to get started with Forex the real way
If you’ve ever wanted to trade Forex, you may have read and understood how it works, but not how to get started. Reading books can give you the knowledge of what Forex trading is, but not necessarily what it takes to become a Forex trader.
Here are five useful points to consider and familiarize yourself with to start Forex trading.
1. Understand currency trading
Obviously, you need to understand what currency trading is and how it works. At the very least, you need a basic understanding of what’s going on, when to buy and sell, what the terms mean, and the various trading strategies available to you. You can start Forex trading in less than a day, but without a plan or knowledge of how it works, you are set to fail.
There are numerous methods to learn to trade Forex; you can read books, take online courses, or join a community of experts to get real-time answers. But pay attention to the information you consume:
Beware of sources that make income statements or say that you can quit your day job and never have to go back to work due to the miracles of Forex. You don’t want a cheat education. Fashions don’t last as long as actual preparation and strategy.
· Book sources must be recognized authors and experts in the Forex field. There are many reliable sources; do your research to determine which authors are worth reading.
Online courses offer another avenue to learn Forex trading, but nothing beats experience and the ability to speak with like-minded traders who started out just like you. You can’t ask questions or throw ideas into books and online courses in the hope of getting answers or feedback like you can in a global community of Forex traders.
What if there was a place that can help accelerate your learning with its community-supported question set and forum posts, daily live streams where you can get real-time answers, strategies, indicators, and trading signals? We have a global community of Forex traders and other students who have started trading and who can provide you with information and answers to many Forex questions you may have. Real-life people giving practical advice can be helpful when you want to find answers right away. We also have a Trading Academy where you can access hundreds of Forex educational videos anytime you want.
two. Strategies development
You should never start a new financial adventure without a plan. Once you understand the basics and terminology of Forex, you need to come up with a strategy. A Forex trading strategy describes what your intentions are with your trades – when you will buy or sell and trigger points, for example.
When you first enter Forex trading, you must use the KISS (Keep It Simple Stupid) system; don’t get too complex right away. Experience is the best education; Get some trading under your belt first. Your strategy should be basic to begin with and it can become more complex over time.
There is no perfect strategy; When developing yours, you should consider this fact and expect some losses, but be prepared for them. With experience you will be able to evaluate your strategy and know what has worked in the past to be able to adjust it.
The best practice you can learn is to backtest your strategy. Backtesting will not only help you confirm that your strategy is worth implementing, but it can also give you the confidence to get started with real money sooner.
Demo accounts that you can backtest on, but to get the best use out of it, you shouldn’t give up on your strategy schematics. A demo account is a great place to start because you don’t have to risk your own money right away. The downside is that people lose interest too quickly because the perceived return is not available; But part of learning is hands-on training. You need to pay attention to price movements and how they play against your strategy. Once you have proven to yourself that your strategy is viable, you can transition to real trading.
3. Get a broker
When you start trading Forex for real, you need someone to execute the trades on your behalf, or what is known as a broker. There are countless brokers to choose from, so you’ll want to do your research and confirm certain information before starting with the first result that appears in your search engine results. Some things to consider:
· Extreme leverage: Avoid brokers who will offer high rates of return on your investment; They know that prospects with higher margins are more likely to attract you, but they never tell you how unlikely it is that you will ever see those margins. The broker gets paid, but you end up losing money.
· Commissions: Always know what commission your potential broker expects; some will charge extreme amounts.
· Spread: A decent broker will offer a tight margin; This means that the difference between the buy price and the sell price is low, which makes the trading cost low.
· Rental: Depending on the location, check that the broker you like is regulated by a certain jurisdiction.
· Customer service: Your broker will handle large amounts of your money and trade on your behalf; it is important that they are relatable, available and trustworthy. A good broker will provide you with fast deposits and withdrawals when you need them.
Four. Low leverage
Leverage is money that you borrow from your broker to increase your trading position. As a beginner, you should start with low leverage to get the experience of a profit and loss live trade without having to consider what you gained overall. Helps you get your feet wet and avoid unnecessarily high risks.
5. Write a plan
Your work and expertise is a waste of time if you don’t have a written plan to track, replicate, and modify based on your results. Your plan should include a list of all your operations. You can keep a physical or digital plan, but it should come in handy.
One challenge that I like to encourage beginners to try is the 25 exchange challenge. You take your simple strategy and apply it to 25 trades without missing your plan. Your strategy should be one that you think is ready to go; It should include when to buy and sell, when to make a profit, when to stop, and how to manage risk. Win or lose, you must execute your strategy in the same way for 25 trades. Many fail because they deviate from their plan.
An important fact to remember is that we all make losses, but it is not a waste of time or money; The knowledge you gain is worth losing if you keep your loss prospects low. You need to understand why you lost so that you can adjust it in subsequent operations. If you quit prematurely or ignore the learning opportunities from your losses, you could lose more than you wanted or even should have lost.
If you have a hard time getting started, take each point step by step; Do not proceed to the next point until you have built the foundation from the previous step. These are solid strategies that will help you get started trading Forex.