How to Get Started as a Forex Trader
The forex markets move at an incredible speed, rising and falling in a pattern as eternal and fluid as the oceans. For many, this challenge and excitement is intoxicating, and traders will often wax lyrical about the special cocktail of thrills and spills that forex is famed for.
Yet it is not the game of luck that this would seem to imply. The currency markets are driven by a wide array of external forces, and where the uninitiated see simple movement, the experienced know that what they are looking at is a visual representation of cause and effect.
This means one very important thing: that forex trading is an art, and one that can be mastered by any with the requisite grit, determination, and talent. If you’re hoping to give it a go yourself, then here are three of the first steps that you’ll need to take…
#1: Educate Yourself
As we stated above, the forex markets are not moved by whim or fluctuations in fortune alone; there are a wide variety of identifiable factors that catalyse the fluxes in currency values. This means that successful trading can almost be seen as a science, and like any academic pursuit, those who put in the most work will achieve the most impressive results. The best place to start is by doing some homework, and the more you read and learn, the better equipped you will be for the realities of trading.
#2: Choose Currency Pairs
Once you have a good understanding of the forex markets and their many components, you should be able to gauge the various properties of each available currency combination. You should also be able to gauge your own personality traits and appetite to risk, and these will help to inform your decision when it comes to choosing your perfect pairs. The ‘four majors’ may be the best place to start, as they’re relatively low risk if you’re still getting used to the markets, but the main thing is to settle on combinations that complement you and your trading style.
#3: Choose Your Broker
Thirdly and finally, you’ll need to choose a currency broker. Your first step will be to create a shortlist of those professionals who offer the pairs that you’re interested in, but once you have this, you’ll need to look at each of them in a little more depth. Budget will obviously play a part in your decision-making, but so too should your time availability and confidence in yourself. Thus, if you’re happy to work alone, you might like to look at execution-only services; if, on the other hand, you’re still a little unsure of yourself, then an advisory or discretionary service may suit you better. The trick is to decide which one would be best for you without any other considerations to cloud your judgement.
Follow these three simple steps now, and you’ll soon be ready to give forex trading a go.