How to Become a Forex Trader

how to become a forex traderThere’s an old joke that applied to becoming a Forex trader, would go something like this: Q. “How do you become a millionaire trading Forex?” A. “Start out with $10 million and lose $9 million.”

The risk of losing money trading Forex is very real, regardless of the amount involved. Those accustomed to a steady income based on a salary or hourly wage have the hardest time adapting to this reality. Business owners and entrepreneurs are accustomed to the prospect of losing, but the rapidity at which profits or losses accrue in some instances can be equally intimidating.

What many are pleasantly surprised to discover, however is that the abilities required to become a Forex trader are quite natural to many people, and that it is entirely possible to acquire any skills that are lacking.

Most of us are already adept at determining if some anticipated purchase is a good bargain or not. We wait for the price of an item to be as low as possible before buying. If we perceive something to be overpriced, if we have the option, we wait until the price goes down.

This is a slight oversimplification, but it is exactly the same process that takes place when you exchange currencies on the foreign exchange market.

The difficulty of trading Forex comes into the picture when the determination of whether a currency is priced high or low must be made. Profits are generated by purchasing, going long, a currency that is below its customary value when compared to another currency in a currency pair. When a currency is above its typical value with regard to the other currency in the pair, a profit is obtained by selling or shorting that currency.

This is all very clean and simple, right?

The risk of trading Forex comes into play if you have purchased a currency that declines in value against the one with which it is paired, or if you have sold a currency that increases in value against the other in the pair. In these events, you lose money, potentially a lot of money, that is limited only by the size of your trading account or how willing you are to admit your mistake and exit the transaction while you still have some trading equity intact.

So, given these two wildly divergent scenarios, how do you become a Forex trader?

There is a no-risk method that will let you take as much time as you need to learn the skills, gain familiarity with the arcane jargon that accompanies trading, and learn the tactics, strategies and tools that offer a valid edge or probability of profitable trading.

This method is called simulated trading and it is accomplished through a free demo account that is offered by Forex brokers in the hopes that you will fund a trading account with them and engage in live trading.

Establishing a simulated trading account with a broker will permit you to practice in a live trading environment without risking real money. The most important discoveries that will be made while engaging in practice trading are whether you have native trading abilities, or if you need some training to develop your proficiency.

To set up a practice account or get additional information on all the aspects of Forex trading, visit New Zealand’s premier Forex broker, Lucror FX today.

 

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