Everyone has the potential to become a forex trader. Many factors work in your favor in the present as opposed to 20 years ago. In 2020, we have advanced computer systems, countless educational content, and the availability of trading platforms.
Though forex trading is available at the swipe of a screen or click of a button, success is elusive. Only the traders with the right knowledge and skills can make consistent profits. Success in this industry hinges on factors like discipline, positive trading habits, and self-control. Without these virtues, you may soon end up wiping out your account.
Do you want to be a great forex trader? Would you like to join the club of elite trader? Below is how you can become a successful forex trader:
1. Find a Reputable Forex Broker
Success start with finding the right platform. Find a reputable platform that offers the most competitive conditions for trading. The ideal broker should offer low spreads, excellent support, powerful trading technology, fast execution, and negative balance protection.
2. Understand Trading Capital
Forex trading does not require a lot of trading capital, as you can trade on margin. Margin is the amount of money that you require to open a position. For instance, to open a $500,000 position, you will have to deposit $5,000 in funds for a 1% margin.
Some brokers have minimum deposit requirements. You may have to meet these requirements before opening an account.
The higher your deposit, the less impact it will have in the event of losses. Trust me: there will be times of losses.
3. Start with a Demo Account
Experience is a valuable currency in forex trading. You can gain some by starting with a demo account. Trading with virtual money allows you to develop your strategy and tone down your emotions. Trade relentlessly and increase your trading confidence. Virtual accounts also allow you to familiarize yourself with the trading platform.
Demo accounts also give you the idea of what it feels like to gain and lose money. You will also learn some valuable risk management skills. Do not rush the demo trading phase. It would be best if you were on a demo account for a significant amount of time. My recommendation is to stay on the virtual account until you are confident in making a steady profit.
As tempting as it may be to move your trading to a live account, the demo experience will save you a lot of heartache and money.
4. Educate Yourself
Trading education is essential to sharpen your skills as a forex trader. Education in trading is continuous; it doesn’t stop as soon as you graduate from the demo account. One of the best ways to mitigate losses in forex trading is to follow a trading trainer or mentor. A professional trader will help you develop the mindset of a successful trader.
There are forex traders that offer educational resources. Take advantage of these tools. Watch the videos, dig through the articles, and attend the webinars. For supplementary educational resources, check out MyTrade’s Blog.
5. Start Small
To become a day trader, start small. With your small account, work until you develop the confidence to go bigger. After grinding for several months in your demo account, take the strategies that you developed, and use them with money that you can afford to lose.
Start with a micro account. Understand your risk limitations and resist the impulse of emotional trading. Beware of the risk that comes with overleveraging and apply leverage with caution. Make sure that you choose a broker that allows you to trade in these conditions.
6. Always Trade with Discipline
In trading, discipline is a virtue. It would be best if you learned how to implement stop losses and take profits that benefit your bottom line. Carry out an in-depth analysis of the charts before you set your stop loss and take profit. These factors will cushion your loss in case of an unexpected reversal.
You also need to keep a trading journal and follow your trade plan meticulously. Record your winning trades as well as the losing transactions. Try to work out why you lost and learn from the experience.
Your trading journal will show you how well your strategy is working under various market conditions. Record keeping will develop a high level of confidence within you.
7. Choose the Right Trading Pairs
The forex market is the world’s biggest and most liquid money market. For beginners and traders with micro accounts, it is advisable to trade the U.S dollar against other foreign currencies. A majority of dollar volume trades on the forex market occur in the currency pairs below:
For part-time traders with research and experience, the currency pairs below offer high liquidity:
Are You Ready to Become a Trader?
To become a prolific trader, you need to implement the strategies above in your practice. The forex market allows investors to make a significant return on their input. Trading can only be a success when you possess thorough knowledge, experience, and education. Take advantage of articles that can help you grow your skills and take action.
Start your trading journey today.