Forex trading is financial trading on the foreign exchange or currency market. This market is open twenty-four hours a day, five days a week and trades involve up to nearly two-trillion US dollars each day. If you are interested in adding this market to your investment plans, then follow these steps to start forex trading.
- Study and learn. Forex trading is complicated and requires constant education. If you are not willing to dedicate yourself to learning everything you can, you will lose money. Don’t just read articles online. Go to a class or seminar. Attend online courses that are offered.
- Understand the basics. Remember that forex trading is the buying and selling of money. When you purchase one type of currency, you are also selling another type simultaneously.
- Set up an account with a broker. Start with a small account and the broker’s preferred software.
- Practice using the trading software. Once you connect with a forex broker and establish an account, you should receive trading software. Read all the help information and guides for the software. You need to become expert at using the software.
- Experiment with a demo account first. Practice with a demo account until you become proficient with both the software and the process of trading. Some experts recommend using a demo account for at least two to three months before putting real money on the line.
- Decide how much you have to lose. The foreign exchange market can be volatile and more people lose money than gain, so be honest with yourself. In the beginning, you may lose. Know how much you can afford to lose while you are learning.
- Determine profit goals. Try to be reasonable here as well. Set goals for what you wish to achieve and in what time frame. Then choose the markets most likely to suit your needs. Try to plan for long-term benefits, not just short term payoffs.
- Place orders to buy. Follow the guidelines of your brokerage company and place orders. Then watch your trade while looking for the next trade option.
- Don’t trade just to trade. Make trades based upon research and evidence instead of emotion or boredom. Trading in this market requires a strategy and a plan.
- Be patient. It takes time to learn the skills to be a productive forex trader.
Remember forex trading is not a regulated exchange. There are many risks associated with this market. Be prepared to lose when you first begin forex trading.