So, you want to be a trader? Not just any trader, a Forex trader? Well my friend, you have made an excellent decision. I will show you how to get started trading forex. The Foreign Exchange Market is the world’s biggest market with over $5 trillion moved per day. The major players in this market are the international banks such as Citi, JP Morgan Chase, and HSBC just to name a few. Then we have us, the retail traders. Before we discuss how to get into Forex, I will briefly tell you what Forex trading is.
In layman terms, Forex is the trading of currency pairs.
Traders using varying means of analysis attempt to foreshadow whether a given currency pair will rise or fall.
For example, if we say EURUSD will rise and if it does just that, we can expect to make profit given that we clear any swaps or fees. Conversely, if EURUSD falls instead of rises we can experience a loss (which can be limited via stop loss).
Now that you have gotten some basic and I mean BASIC knowledge of Forex, it’s time to get used to the software you’ll be using. I suggest you install Meta Trader 4 (app to place your trades) onto your phone or device and make an account on TradingView (website to analyze the charts). Now you should make a demo account on Meta Trader 4 and play around with entering sells, sell stops, sell limits, buys, buy stops and buy limits. I suggest a starting balance of $10,000.
- Sell = Price of currency pair will fall.
- Sell Limit = Enter me into a sell when price falls to the following price: x.xxx
- Sell Stop = Enter me into a sell when price rises to the following price: x.xxx
- Buy = Price of currency pair will rise.
- Buy Limit = Enter me into a buy when price falls to the following price: x.xxx
- Buy Stop = Enter me into a buy when price rises to the following price: x.xxx
x.xxx = a price that you will specify in Meta Trader 4 to activate your limit/stop order.
I now know a bit about the market and have played around on Meta Trader 4, can I start making six figures now?
Forex is something that cannot be learnt overnight, or a in a week especially not on your own. It takes practice, commitment and the will to find what trading style works for you. The next step I suggest is for you to either find a mentor to teach you how to analyze the markets or use resources online to learn. Go to TradingView and start analyzing some pairs and place those trades on your demo account.
Ideally, you want to risk no more than 5% capital per trade, which means if the trade hits your stop loss you will not lose more than 5% of your current capital. Try to aim for 5–7% growth per week. Until you can do this on a demo for at least six months, you should not make a live account.
There is an enormous difference between demo and live trading. I can explain what that difference is with one word, psychology. It’s easy to trade nonexistent capital because if you lose it, there are no repercussions. The only way to get the mental strength, the discipline and the ability to trust your instincts is to trade with your own capital.
Now, to make a live account just find any Broker that supports your country of residence and fund the account or you can view a list of our trusted brokers. About 95% of traders blow their first account. Heck, I know a few profitable traders who blew their first few. So, I suggest you fund an account anywhere from $1,000 to $2,000 with 1:200 leverage. This is enough equity for you to enter numerous trades, swing trade and allow for a greater margin of error.
Do not get discouraged if you blow your first few accounts, this journey is a long one, and persistence and hard work does indeed payoff (literally).
I hope this post has helped everyone learn about the basics on how to get started trading.