Forex where to start
So you're just getting started in Forex, and there's hundreds of systems, books and courses out there, so where do you begin? Most Forex traders spend years sifting through the junk trying to create a Forex passive income for themselves. I don't know about you, but I'd rather follow a proven path to success rather than wasting my time reading through the same old rehashed materials that are out there. By the end of this article, you'll know what you need to shortcut your way to trading success.
Having A Proven, Profitable Forex Trading System
Success in Forex really comes down to having a proven, profitable Forex trading system. Why? Because anyone can turn a daily profit, and even a weekly profit, but very few traders can make a consistent Forex passive income for months or even years. To achieve a consistent income, you need a consistent means of making this income, and the only way for most people to achieve this level of consistency is to have a system.
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Successful Forex traders devote their entire lives to developing a proven, profitable Forex trading system. If you're looking to develop your own system as well, then you'll be waiting a long time to see a return on your work. That's why I recommend that you leverage on someone else's work by buying their proven, profitable Forex trading system instead of developing your own.
7 Steps to Start Forex Trading
Once you have completed your research and are ready to begin forex trading, you’ll want to follow the following steps to get started.
Step 1: Research and Select an Online Forex Brokerage Account
Not all forex brokerage accounts are created equal. Some come with additional educational resources for traders, others have lower fees than others.
Determine what you’re looking for out of your brokerage account, then select one of the best forex brokers to help get you started.
Step 2: Open a Trading Account and Deposit Funds
Once you’ve selected the right forex brokerage account based on your personal goals, you are ready to begin the process of setting up your account. Follow all the prompts requested by your brokerage, then you’ll be ready to deposit funds.
Each account has a variety of differences, including a minimum amount to get started. Some require just $100 to get trading, others require a more substantial initial deposit. Begin your deposit with the amount you are comfortable with.
Step 3: Choose a Currency Pair
When you were doing your research, were there any currency pairs that were of interest to you? If so, fantastic, you can go ahead and move on to step 4.
If you are ambivalent, it’s time to dive a little deeper. Each brokerage has a different quantity of currency pairs that can be traded through their accounts. Discover which ones are available to you and then begin step 4, analyze and research.
Step 4: Analyze and Research the Market
Start working on a trading strategy based on your research of the market. While it is impossible to predict and perfectly time the market, understanding the market and your desired outcome will help you mitigate risk and make solid investing decisions.
Step 5: Read the Quote
Once you’ve selected your desired currency pairs, you will look at the quote. The quote consists of the currency pair followed by a bid and ask price. The spread is the number of PIPs between the bid/ask.
Here’s an example of a forex quote:
EUR/USD = 1.1704/1.1708.
The bid price = 1.1704
The ask price = 1.1708
The bid price signifies what you would be selling for, whereas the ask price is what the broker is asking traders to pay to buy.
Step 6: Determine Your Position
Once you’ve made a decision on the currency pairs, you’ll want to determine how much of your account to risk on the trade. It’s recommended that you do not risk more than 1%, but some traders will risk up to 3%.
Depending upon your account size, the percentage you want to risk can now be calculated at a dollar amount. Let’s assume you have $10,000 in your account and you are willing to risk 1% per trade. 1% of $10,000 is $100 that you are willing to risk.
After you’ve made that determination, you can then figure the PIP risk on your desired trade. This is the difference between the entry price and the stop loss order price. Some people always have a 10 PIP stop, while others adjust based on market conditions.
Once you’ve determined your risk amount and PIP risk, you can determine your position based on this formula: $ at Risk/(Pip Risk x Pip Value) = Position size in lots
- The “$ at Risk” is what we explored in paragraph 1 of this step.
- The “Pip Risk” is what we explored in paragraph 2 of this step.
- The “Pip Value” is an already known variable. They are fixed at $10 (standard lot), $1 (mini lot), and $0.10 (micro lot).
- Using information from our example we can calculate the following: $100/ (10 pips x $1) = 10 mini lots
Once you have your own information to plug in, you will be able to determine the proper position for your trade.
Buy: A buy-stop order is the instruction you give to your broker to buy a currency pair once it reaches your specified price or higher.
Sell: A sell-stop order is the instruction to sell your currency pair when it reaches a specified price.
Step 7: Make Your Move!
Last but not least, you’re ready to place an order. Make your selection and begin trading currency pairs.
Be sure to continue watching the market to keep on top of any decisions you should make with your forex trades. Depending upon your desired trading strategy, you might be moving quicker than you think.
Forex Trading Strategies
There are various forex trading strategies that you can utilize to improve your overall wealth. Some might appeal to you, others might not. There’s no right or wrong here. Each one allows traders to determine when they want to buy or sell a currency pair.
Day Trading
As its name implies, day trading is a strategy in which you buy and sell currency pairs within the same trading day. You can do this on a single trade or multiple trades over the course of the day.
Scalp Trading
Scalp trading is a trading strategy where you take small profits on a more frequent basis. This is done by opening and closing multiple positions over the course of the day. Traders can do this manually or with an algorithm that has set guidelines on when/where to enter/exit positions.
Position / Trend Trading
Compared to the other strategies listed above, trend trading / position trading is a longer-term strategy. It attempts to have positive returns by making moves based on the market’s momentum.
Swing Trading
Swing trading follows short-term surges and dips that go against typical trend direction. It capitalizes on these surges, but it requires quick action and intense market oversight. It relies heavily on technical analysis.
Related: Who controls forex market
How To Be a Successful Forex Trader
Understanding the intricacies of forex trading will be beneficial to your trading journey. Take the time to review courses online and any resources provided by the broker of your choosing.
There’s no one-size-fits-all forex trading strategy, but with time you can find what works best for your personal financial journey. You can also reach out to your financial advisor for guidance to ensure your strategies work long term and with your overall goals.
Frequently Asked Questions
Yes. There are numerous online resources that provide you with the tools needed to learn how to trade forex. The best forex training courses are a great place to start teaching yourself how to trade forex.
You can get started with as little as $100, but depending upon the brokerage you select, you might need to open an account with a higher balance.
When you travel internationally you will need to exchange your currency for the currency of the country you are traveling to. But because the exchange rate fluctuates between currencies, trading currency has become a viable investment opportunity even when investors are not traveling abroad. It allows traders to capitalize on the currency fluctuations against each other.
Recommend for you:
Proven To Outperform 99.9% Of Traders: Trade Command Center
💧...is a uniquely designed and user-friendly software that displays trading signals for particular pairs hourly every day. The creators of the software teamed up to provide users with advanced Forex signals. As such, traders can benefit from it regardless of their experience level.
💧...provides trading signals every hour across different time frames. In recent times, a huge number of forex signals have been availed and if you are serious, you can use them to earn extra money. The Trade Command Center was created to help double your current earnings and increase your profits as well.
TRADE COMMAND CENTER
