Forex Trading: How To Become A Currency Trader

Forex Trading How To Become A Currency TraderWhether you’re looking for a way to get started in trading foreign exchange, looking to become a full-time foreign exchange trader or looking to occupy the space between the two extremes by supplementing your net income with profits derived from trading foreign exchange on a regular basis, you have got to start somewhere. The good news is that it’s quite simple to become a currency trader, since the tools you’ll need are widely available to you without having to search far and wide, however, there’s a great distinction between becoming a currency trader and becoming a successful currency trader with measurable trading gains; at the end of the day, which type of currency trader you become—successful or less-so—depends on your skill set, your level of discipline and your willingness to follow some basic, common sense advice.

The first task in becoming a foreign currency trader is to ensure that you pick the right broker. Because the broker not only controls your access to the market, but further, influences even the most successful retail trader’s net profits because of the point spreads they impose, the choice of the correct broker for you is critical. You should be sure to thoroughly investigate not only the broker’s fee structure, but also their history, their reputation and standing in the broker community, their responsiveness and level of service provided, and, equally importantly, their platform. As a novice foreign currency trader, you should only consider working with brokers who offer the opportunity to trade virtually in a free demo account, and you should focus on identifying those brokers whose platform and trading system are as user-friendly and as responsive to your needs as possible. Look for ones that also provide a measure of access to charting tools and additional tools and indicators so that you have the resources needed to confirm your trading decisions in multiple ways before pulling the trigger on a given trade. Only work with brokers who offer newbies mini or micro trading accounts and who keep their leverage ratios reasonable. Most importantly, be certain that you understand the broker’s methodologies for the funding of accounts and for the withdrawal of profits from accounts, as well as the time frame within which they commit to do so and the corresponding fees which they will impose for the service.

If you want to become a foreign currency trader you must next undertake to educate yourself about the forex markets and their workings to the fullest extent possible. This means not only that you should strive to understand the nuances of the markets, of the different major currency pairs and their particular rhythms and of the strategies utilized by successful traders to realize their gains, but that you should also become fluent in the language of charts, tools and indicators, whose proper usage is an integral part of forex trading success. Don’t forget that the forex markets are greatly influenced by outside factors such as global or national economic and political news, and make time to keep current on such newsworthy developments on a regular basis. Educate yourself about your own strengths and weaknesses as well by practicing trading in your demo account (or in multiple demo accounts from multiple providers, in order to determine which platform is the best fit for you), honing your skills as you pay close attention to the things that come easiest to you, and the things that are harder; study your paper gains and losses to understand which mistakes you might have made, and which trading habits and strategies seem to be working best for you. Doing so will also lend itself to you naturally determining which currency pair is the most understandable for you, and which pairs you’re better off not trading in.

All successful foreign currency traders treat their trading as a legitimate business, holding regular business hours. Set aside a certain number of hours per day for your trading activities, and always conduct your trading business from the same place; if you don’t have the luxury of a separate office from which to operate, designate a quiet corner of your home as your business’ “headquarters”, and work from there. Like all legitimate businesses, your trading activities should unfold according to a business plan, which lays out your “firm’s” objectives and goals and clarifies your operating strategy. Your plan should not only address operations, but should also discuss risk management and money management policies as well. Spend as much time as necessary writing and refining your plan as you continue to practice your trades in your demo account, because the outcomes of your practice activities can, and should, influence your plan.

Forex Trading How To Become A Currency TraderOnce you’ve gained a certain measure of confidence from your demo trading because you’re paper trades have begun to display profitability, it’s time to take your trading live. Start small, focusing on your selected currency pair and looking for trades where the signals and indicators all point in the same direction; increase your chances of trading with the odds by utilizing as many levels of indicators as you can incorporate into your decision making process, because the more indicators you use, the more reliable your trades will be. Try at the very least to confirm your trading decisions by reading candlestick charts and charting both support and resistance levels, so that you can trade looking for the level to hold or break; if you can, look also for trend lines and for evidence of Fibonacci retracements or arcs, or for other types of interpretable patterns (such as a strong head and shoulders). If you can confirm these results in more than one time frame, with all indicators still pointing in the same direction, then you’ll be able to identify reasonable entry and exit points with a high probability of success. Remember that your goal is not to avoid all losses, but rather to ensure that you achieve a net gain by having your aggregated profits outnumber your total losses.

The last important task to be accomplished toward becoming a successful currency trader is to instill in yourself the habit of practicing good risk management, coupled with sound money management. Because it’s a given that any trader, no matter how successful, can potentially lose all of the money in their trading account, it’s good to be in the habit of regularly transferring profits out of your trading account, leaving just enough to stake your continued forex trading activities. Steer clear of indulging in the generous leverage so liberally offered by forex brokerage firms, and be both disciplined and principled at all times: the discipline will keep you informed and on top of your positions at all times, while the principles will come in handy when you steel yourself against greed and stick by your stop losses. If you’re thorough and patient and have the capability to work both smart and hard, you’ll have become a foreign currency trader before you even realize it.

If you have any questions or looking for further information, please do not hesitate to contact us. It is our pleasure to help you.

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