Do you see yourself as a Forex trader? No, not the high risk, adrenaline surging trading you see portrayed in films. Forex traders today, thanks to the internet, are everyday folk; the school mum or dad, the teacher or the person sat next to you on the train.
Getting started with Foreign Exchange currency trading, known as Forex, is not as difficult as you may have thought. You have a number of options available to you:
- Jump straight in and learn as you go – not recommended
- Do some research on what Forex trading is all about – there are plenty of blogs and info sites available from any search engine
- Take a free beginners course from Forex Trading Australia
- Open a demo account with a recommended trading platform
What’s Required To Become A Forex Trader?
The right attitude
Forex trading is not a ‘get rich quick’ scheme. There is excitement to be had when you see your trading become successful, but it is not really a good option for adrenaline junkies. Men and women can trade, and both bring their own unique psychology to trading. Recent research even indicates that in Australia women make the better traders!
The ability to research and learn
Sometimes from your mistakes! Taking a beginners course will ensure you have the essential information before you start to trade and those mistakes will be kept to a minimum.
Money to trade with
You do not need to be a hedge fund to start trading in Forex. There is no legal minimum for Forex trading, but many brokers ask for a minimum deposit, usually around $100. It’s recommended that no more than 1% of your account be used for a single trade, so $1 is not going to bring in much profit but is useful while you are finding your feet. How to create your budget and use risk management is high on the agenda when learning to become a competent Forex trader.
What You Need To Learn About FX Trading
All professions have their own jargon. Do you know about currency pairs, leverage, pips? You will need to have a full understanding if you want to trade successfully.
You do not need a maths degree to understand the market, but you do need to find the type of analysis that works for you. In brief, there are two main types:
- Technical Analysis – a relative newcomer to the market but increasingly popular, this uses analytical tools to provide data that predicts entry and exit points.
- Fundamental Analysis – this explores a range of values that can affect trading movements. These can be political, geographical, social and financial, or a combination of all.
The ability to not be driven by greed, fear or excitement is essential for a successful Forex trader. Most losses occur because a trader lacks self-control over their decisions. Forex trading offers the freedom to make your own, but if emotions drive those decisions, the cost could be high.
Patience is another psychological element that needs cultivating if you wish to be successful. In short, you need a set of your own rules to trade by and the ability to stick to them. Taking a training course helps you find the set of rules you can function within, to ensure your trading is not an emotional rollercoaster.
A broker & trading platform
The internet has a proliferation of platforms to choose from. Knowing which to choose is why you need to spend some time and energy learning about the market, its highs and pitfalls. One pitfall is not selecting a regulated, trustworthy Forex broker online.
To choose the right platform for yourself requires certain elements to be considered:
- The brokers and their platforms should be regulated, for those based in Australia, this would mean by the Australian Securities and Investments Commission, ASIC.
- What their deposit, spreads and margins are. To do this you have to know yourself what they mean; another reason to take the time to learn!
- How safe and secure they are – after all, you are trusting them with your money.
- How easy is the trading software to use?
- Have they got a free demo account? This is essential for anyone new to Forex trading.
- How good is the customer support – check out trader reviews.
Becoming a Forex trader does not happen overnight, but it is achievable, enjoyable and offers great financial potential. Take the right route to become successful, put in the time to learn and reap the rewards that this will bring.