10 Steps to Be a Successful Forex Trader

We heard you. You’ve been looking into forex trading as a potential secondary income source, but getting started seemed so daunting. After all… all that charts, data, strategies… Where should you even begin?

To help you out, we’ve put together this forest trading for beginner roadmap. This process consists of 10 simple steps and will equip you with the fundamental pieces you’ll need to start trading currencies.

Step 1: Find Your Broker

There is no trading without a broker. Therefore, your first goal is to find a broker compliant with your local regulations with credible licensing and qualifications. You also want a modern broker considering how much trading is done on the phone or tablet nowadays.

Furthermore, a good broker will also provide you with plenty of learning materials, which will help with future steps listed below.

Step 2: Understand Market Basics

The next thing is to understand the market basics. The foreign exchange market is open 24/5, from 5 p.m. EST on Sunday until 4 p.m. EST on Friday. But depending on your actual strategy, you may want to focus on high or low activity trade hours. This means you must learn to convert the market hours to your local time zone.

Step 3: Read up on Strategies 

Once you familiarize yourself with the market basics, it’s time to learn about strategies. Again, there are plenty of books, audiobooks, videos, and online courses available to get started.

Step 4: Evaluate Your Risk

The next step is to evaluate your risk. Not all traders are starting on equal financial grounds. While some might decide to go all-in right away, others may feel more comfortable testing water first.

Step 5: Learn About Research Methods

At least half of froex trading falls onto research. Thus, a new trader must understand different research methods.

Forex trading is a combination of technical analysis and news mining. The goal is to monitor, predict, and respond to price changes. Furthermore, basic statistical analysis is a good skill to have. Meanwhile, start compiling a social, economic, and political news folder that may impact currency values.

Step 6: Find a Community

Join an online community if you can. Starting to trade is overwhelming, and having peer support will make your life much easier. A community is also a good place to find a mentor.

Step 5: Choose Forex Pairs

With ample research, you’re ready to choose your forex pairs. For beginners, you may want to start with high-volume currencies. These are the most frequently traded currencies.

Step 7: Open a Demo Account

With all pieces together, you’re ready to open a demo account. Demo accounts don’t work with real money. Therefore, you can test out strategies and get comfortable with the trading tools without any concerns.

Step 8: Invest with Real Money

And once you’re ready, it’s time to invest with real money. Start small and ease yourself into the pressure associated with gain and loss.

Step 9: Keep a Trade Journal

You should keep a trade journal which documents your experience in the market. Be honest with your records and include as much information as possible. This will allow you to understand what works and what doesn’t so you can grow.

Step 10: Reflect, Optimize, and Repeat

Finally, always re-evaluate your performance based on your documentation and change of financial status. Optimize your strategy accordingly, then rinse and repeat.

Are you ready? Let’s get started with forex trading!