Forex trading is full of promises, but also pitfalls and perils. Being a successful forex trader is the dream of countless beginners, yet those who achieve this goal are not very numerous. Many are tempted to think that the low success rate of retail traders in comparison to the supposedly better returns of hedge funds and institutional investors is caused by the lack of access to special tools and secret trading methods. But this is not true. Instead, large and successful investors always plan everything in advance, carefully determine their purposes, consider the risk and reward potential of every scenario before acting on them. It will take the beginner some time before he has acquired the discipline and the mental attitude necessary for successful trading; on the other hand, with commitment and determination, it is not exceptionally difficult to get rich in trading forex.
Establish your goals
Obviously, the first step of planning your destiny in forex trading must involve the planning of your goals. What is your purpose in beginning a career in trading? Do you seek a small income boost that will be a small hobby for you? Or do you just seek the thrill of taking part in a risky activity? If these are your aims, obviously you shouldn’t risk much, and must not get carried away by occasional sizable profits that will come your way, even though you don’t quite know what you’re doing. If you seek a sizable extra profits to supplement your full-time job, and do not plan or want to turn forex into your main source of income, you can afford to risk a bit more than the thrill-seeking gambler discussed above, but you must still make sure that you do not have great expectations from your trading activity. In the absence of training and commitment, achieving great returns in forex is similar to winning the lottery: possible, but not very likely. Finally, if you want to achieve financial independence through currency trading, if you seek to make a lot of money in this lucrative business, and don’t mind taking the time to learn the ropes, and study your lessons, you can set the bar high. In this case, you must adjust your life, your daily schedule, and your activity plans in accordance with your newly decided career as an independent trader.
Choose a broker
Once you have decided on what you want from trading, and have a clear plan and schedule for the future, it’s time to decide on which broker you want to open an account with. This is the most crucial stage of this entire process, as the choice that you make now may well determine the lifespan and profitability of your trading job. Even if you have an excellent background perfectly suited to currency trading, and you possess the tools and faculties necessary for creating excellent strategies, if your broker is a crook, or if he is inefficient and incompetent, it is almost impossible that you will derive any quick benefit at all from learning forex, and investing your energies in trading, and the dangers are obvious. So make sure that you choose the right broker for your level of knowledge, risk tolerance, and expectations from currency trading. If you invest enough time to this stage of your debut in the forex market, you will be building your palace on a foundation of granite.
Open an account
After deciding on the broker, go and open a demo account. Play with the various features of the software. Do everything you can in a risk-free environment to gain a good understanding of the platform. Do not consider anything extreme, create difficult and unexpected strategies and scenarios and test them in your demo account to see what you can expect in the forex market. Make sure to try high leverage too. Seeing your account wiped out in demo trading may be unnerving, but it is surely nothing in comparison to the pain of seeing actual savings evaporate as a result of faulty choices.
Once you’re confident that you have a good grasp of demo trading and the trading platform, it is time to move to the next stage of your career with a live account.
Practice and study
To become a real forex trader, you must get a real education. The educational process involves hard work, patience, study, and lots of practice. You don’t need a teacher to gain a good understanding of trading, but it is of course necessary that you devote a considerable amount of time to comprehending what drives the price action, how the markets move, and how you can create the big picture. Without these components, you’ll be like a fish in the mud: however hard you struggle, your efforts are futile and fruitless. Indeed, in today’s world study and education are key to success in every field, and it is only fitting that trading requires the same kind of investment in time and energy.
We have described these steps to give you an idea of the journey that awaits you as you perfect your skills and reach greater levels of proficiency in the markets. While it is not that hard to become a forex trader, becoming a great trader requires considerable investments, just as with any other activity. Acquiring this mentality, and approaching the problems and difficulties of trading with a rational and logical approach is the key to success in the long run. The good news is that once you acquire the right attitude, profits and success are quick to come, and pleasant surprises are plentiful too.