We’ve all heard about how trading the forex markets can offer a wide range of opportunities for anyone with a laptop and an internet connection. But, despite being available to everyone, entering this $5.3 trillion dollar a day industry can be quite intimidating.
So, if you’ve been considering entering the forex markets, but don’t know how and where to start, don’t fret! We’ve put together a 5-step checklist that’ll get you good and prepared to venture into the world of online trading!
1. Research Forex
As with most things in life, education is key. No one should enter the FX markets without having done some extensive research, starting from what forex trading is, all the way to how to analyze charts, use indicators and follow fundamentals. The internet is filled with FREE, well-structured and easy-to-follow forex courses/quizzes that take you from beginner to pro before you risk any of your money! You can even research other forex traders whose instruments and trading style suit your preference and copy what they’re doing! Start slow, then work your way up through the difficulty levels at a pace you are comfortable with. And above all, make sure you never stop learning!
2. Manage your trading expectations
While some might want to enter the FX markets just to see what they’re about, most people enter with the aim of making money – and quickly! The number one step you can take to ensure you are setting yourself up for success is to be aware of what you’re getting into. While FX trading can make you money from the comfort of your own couch, that certainly doesn’t mean it is easy! And just like any other profession or business venture, it requires hard work and dedication. So, don’t be discouraged by the inevitable long and challenging learning curve. Everyone goes through it and by knowing that, you are already a step ahead of your peers!
3. Get an FX demo account
Forex demo accounts are the single best way to get acquainted with the markets. They allow you to experience real-time market moves and conditions and their impact on your hypothetical trades, without risking any collateral! They’re essentially a sort of flight simulator for beginner traders. In fact, even as you progress and get better, they are a fantastic way to test out a new FX trading strategy before investing real capital in it. And they’re free! If there’s one thing you take from this article it’s that you should rinse your demo account for all that it’s worth before you risk a single penny!
4. Pick a trading instrument
To start with, it’s always best to focus on one instrument. This could be a currency pair, an energy, a metal or an index. Familiarize yourself with how it moves and what factors impact it. By doing this, you’re simplifying the markets and getting used to both the technical and fundamental side of FX trading, without getting overwhelmed with all the variables. As you get better, you can add more instruments, more charts, and more risk. And you’ll be well equipped to handle it!
5. Allocate capital you’re willing to risk
As we mentioned, FX trading is no different from any standard business or investment venture. It offers just as much risk as it does opportunity. So, you must never enter the forex markets with money you cannot afford to lose. And yes, this applies even after you’ve tested and optimized your trading strategy on the demo account! The markets are unpredictable, and nothing is ever for certain. So, allocating a specific amount of money that you are prepared to lose is very important to the trajectory of your FX trading journey. It’s also a great way of practicing discipline and control.
The main thing to remember is that, as with anything new, you will stumble and fall as so many traders have done before you. And that’s OK! As long as you follow these 5 steps, you can make sure you are as prepared as possible for anything the forex markets could throw at you!