Forex trading is one of the most appealing ways to make money online. It promises a financially independent lifestyle, and according to those YouTube and Instagram forex 'gurus,' the happily ever after you've always wanted.
But before you get ahead of yourself, you first need to lay the proper foundation for your new venture. Here is a guide to help you start online trading quickly.
1. Learn how the forex market works
Think of the forex market as an investment. You wouldn’t splash your money on an investment that you don’t understand, right? So, before you even look for an online trading account, understand what forex is, and how it works.
In a nutshell, forex is a decentralized market place that allows investors to trade (buy or sell) trading instruments. The trading instruments can be currencies, bonds, stocks, bills of exchange, etc.
However, the main traded instrument in this market is pair currencies.
Once you’ve understood the basics of the forex market, you can then move on to the next step.
2. Look for a broker
Now that you’ve understood a bit about the market, you’ll know that you’ll need access to the market – that’s where brokers come in.
A forex broker essentially provides you with the online trading platform you need to start trading. There are hundreds of forex brokers in the market, and choosing the right one is crucial to your success in online trading.
So, don't settle for the first broker on your plate. Look for brokers with good security and regulatory compliance, friendly transaction costs, easy to use platforms, fast order execution speed, good customer service, among other features.
Finding a good broker is the first step to succeeding in forex.
3. Find a good online forex trading platform
The platform you settle will play a crucial role in how well you like forex trading. Choose a platform with a user-friendly and straightforward interface that you are comfortable using.
Moreover, look into the additional features that the platform offers. A good platform should provide you with free charting tools, technical analysis tools and a news feed. Ideally, the more tools it has, the easier it’ll become for you to analyze the markets.
4. Start with a demo account
This is the most crucial step for any beginner trader. Since you don't have adequate experience in the market, you need a practice account just to help you know what you're getting into.
Your broker’s online trading platform should provide you with this account.
Take as much time as you need practicing your trading strategies until you find one that works. Also, use the demo account to get over your market fears and overcome your emotional trading.
This can be a few weeks, or even months before you find a working strategy.
Once you’ve found a steady winning strategy, you can then move into a real account.
Lastly, you need to know how much you are willing to put into the forex market. Remember, the biggest perk with this money-making strategy is that it’s very volatile. So, it’s very possible that you’ll lose your money.
In fact, most beginners blow their accounts several times, before finally finding their breakthrough. But you can avoid this by testing out all your strategies on a demo account.
Note also that different online trading brokers have different investment minimums. Some brokers go as low as $10, while others go as high as $1000. So, depending on your budget, find a broker you can afford.
Online forex trading is one of the best and fastest ways to grow your income, but it's also a quick way to lose it too. So, before rushing into it, you need to learn the art of patience.
Successful traders are patient traders. They know that it takes time before mastering the skill, and even more time to maintain the accounts. The steps above should help you get your head in the ring, but how successful you’ll become depends solely on you!