Here is a question you will probably ask yourself – how do I trade Forex? This article will answer your question and guide you through the first steps.
How to Trade Forex Step no.1
What is Forex?
Firstly you must understand the basics of this financial market before entering. By saying that we mean that you must learn the principles of the Forex market, and it’s workings.
What currencies and currency pairs are traded in the market. Learn what moves prices and how to analyse the market (3 main approaches, the fundamental, sentiment and technical analysis). Learn the pros and cons of trading Forex over other markets.
Remember – before you can run – you must be able to stand stable and not fall down when you walk. Only then you can run.
How to Trade Forex Step no.2
Choose your trading broker and platform!
If you decided that Forex is for you and you are ready to take the next step, you must then choose a broker and learn how to use their platform. Nowadays, there are hundreds of brokers and you can find all the information about them with simple search on the likes of 100forexbrokers.com.
There are few things you must pay attention to when choosing a broker to work with. From commissions, transparency, clear withdrawal policy, minimum requirements. What trading platforms and instruments they offer etc.
Once you’ve chosen a broker., get familiar with the platform While many brokers offer the most popular trading platforms such as MetaTrader 4, many other brokers offer their own platforms and they can vary. So, you have to learn the platform and how to trade with it.
How to Trade Forex Step no.3 –
Define the trader you are!
While the most common type of traders are technical analysis-based traders, some others will prefer the fundamental analysis trading and others will prefer to trade based on the sentiment analysis and ride with the current events.
You have to understand the differences between them, and see what suits you best!
How to Trade Forex Step no.4 –
Your trading style!
We all are busy people with many responsibilities. It’s important that you clearly define your trading style and possible time you have available to spend on trading the markets.
You have to see what fits you best. Is it scalping, day-trading, swing trading? Is it long term or short term? etc. You must dig deep enough, and see what fits you best.
You can’t know this – until you have experimented.
How to Trade Forex Step no.5 –
Forex Trading Strategies!
Now you are in the game! You probably understand that Forex trading isn’t all about clicking sell or buy and collecting the profits.
Once you get familiar with your preferred analysis and your trading style and how to use your trading platform, it’s time to choose the strategy or strategies and practice them.
Why to practice?
To better understand market conditions and the strategies that will offer the best value to you and will allow you to trade better.
So how can you choose a good Forex trading strategy?
There is a saying that the amount of available trading strategies are equivalent to the number of traders in the market.
Every trader tries to “innovate the wheel” and come up with a self-created strategy.
There are tons of free strategies available online. There are many paid systems on the market. There are trading courses. There are books, webinars, seminars, automated solutions etc…
So, before you start your research, here are a few things you have to know about how to choose the correct forex strategy for yourself.
First of all, it must fit in with your trading style. Then you need to find your comfort with it. What pairs perform best for you, what time frames provide the best chances of success etc.
Once you have found the comfort with your strategies, you will have control over your trading.
How to Trade Forex Step no.6 –
Track record and improve!
One of the MOST important things to do when you are involved in Forex trading is journaling.
This means that you have to create a journal where you’ll constantly update all information about each trade you wish to take. Detailing your reasons, analysis, numbers and results etc.
You’ll be able to know which of your strategies perform best. From technical analysis, to particular time frames on charts, and learn about your weaknesses and know what to avoid in the future.
Most traders avoid journalling out of laziness. Yes, it is time consuming. But if you are serious about your Forex trading and want to trade successfully, this is an important aspect.
You can’t become a pro trader if you have habits of a beginner.
How to Trade Forex Step no.7 –
Surround yourself with like-minded people.
Trading is a lonely business at times. It’s you, your computer and your four walls. It will serve you best if you surround yourself with like-minded people that will understand your trading passion, methods and strategies in order to help you when you need it. Especially in not making rash decisions.
Many traders jump in the deep end of Forex trading without knowing how to swim. You can imagine how it ends up for them. If you don’t want to become part of these statistics, take the right steps as described above.
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