How to Become a Forex Trader

A forex trader, also known as a foreign exchange trader, trades currencies through the forex market. Anyone who has a little money and patience to develop knowledge and experience can start trading forex.

The валютный рынок is one of the largest and most liquid financial markets in the world with a daily trading volume of $6.6 trillion.

If you want to начать торговать на форекс, follow the tips in this guide to help you get started. Just bear in mind that becoming a confident trader requires hard work, patience and lots of practice.

How to prepare for trading forex

To prepare for your journey in online forex trading, follow the steps below:

1. Practise trading with a demo account

Open a demo account with a trusted CFD forex broker and practise forex trading with virtual money. You can place real-time trades and see potential outcomes. A demo account simulates a live trading environment while also giving you access to real-time market data and expert insights. Basically, trades can be placed in real time and represent what would be true losses and gains if you were trading with real money.

2. Set realistic goals

Setting goals is an essential part of online forex trading because performance and income often differ from month to month. Goals give you something to aim for when trading the forex market. Before you set out on any trading journey, you should create a plan and bear in mind what trading goals you should set. Some professional traders like to set long-term goals and minimise risks by trading smaller amounts.

3. Trade-specific currency pairs

You can trade specific currency pairs on the forex market and start by trading among these pairs because of their strong liquidity. You might also consider trading during peak hours when the forex market is most active. The following currency pairs are popular because of their high liquidity:

• USD/EUR
• USD/JPY
• USD/CHF
• USD/GBP
• USD/CAD
• USD/AUD

5. Use a reliable trading platform

Reliable trading platforms, such as the MetaTrader 4 platform, can provide market coverage and a broad range of helpful tools. You can practise forex trading with a forex broker by opening a demo account on the MT4 trading platform. Check that your chosen trading platform has features such as:

• Advanced charting capabilities
• Trade automation
• Customisations
• Real-time market news

6. Keep practising

Currency markets change frequently, providing many opportunities to keep learning. Even after you gain live trading experience, you might want to continue practising with a demo account, especially when you are testing new strategies.

7. Open an account with a reputable CFD forex broker

To start online forex trading, you will need to choose a reliable CFD forex broker. One way of finding the right broker in the forex market is to open an account and explore what they have to offer. You can also check their demo account, download their forex platform, read their market analysis and test how good their website is.

8. Start trading small

It is better to start trading with a small amount of money and increase the amount you wish to put on your trades as you become more confident. When you start trading, you will lose some trades and win on others. However, you will actually learn from every step you take and every mistake you make. Be patient and take your time.

Skills that forex traders need to develop

Forex traders should develop skills that help lower their risks and increase their chances of success. These include:

Anticipation

Learn to anticipate risk so you can minimise your number of losing trades. For instance, you can protect your position with certain order types, such as trailing stops which set the stop price at a fixed amount below the market price with an attached “trailing” amount.

Planning

Create a trading plan and follow it so you can achieve your goals. Planning is an important element of successful trading. A trading plan can help you head in the right direction as it provides a framework to measure your trading performance, which you will be able to monitor continually.

In your trading plan, you should include how you will enter and exit trades and also include criteria such as risk parameters, position size, what market environments will be traded, and a lot more. When building a trading plan, ask yourself a few questions such as the following:

• Will I trade one currency or pairs?
• What is my profit expectation?
• How much am I prepared to lose per trade?

Answer these questions to help you develop your course of action.

Patience

Having patience and self-control is essential because these abilities can help you make rational trade decisions. In fact, being patient allows you to wait for the right time and price to buy и sell.

Keep a journal and review your trades

Record your trading activity in a journal. It is helpful to spend some time reviewing how your trades turned out. Allocating time to look back on why you made certain trading decisions over the past month, how the trades turned out and what you could have done better can be invaluable in developing a strategy that suits your individual trading style.

Управляйте своим риском

Manage your risk by using stop-loss orders effectively to limit your losses if the market moves against your position. In the same way, a take-profit order can help short-term traders to manage their risk. They can reach their profit target and exit a trade before it starts going in the opposite direction. You can use both stop-loss and take-profit orders at once to manage your positions more effectively.

Accomplish your trading goals

Forex trading needs consistent discipline and practice. If you want to learn all about forex trading with a global broker then open a demo account with IronFX to practise your trading skills. You can also visit the Школа IronFX via IronFX’s website and access a range of educational resources and materials to improve your trading skills and help you become a better trader. 

DISCLAIMER: This information is not considered investment advice or an investment recommendation, but is instead a marketing communication