The Ultimate Guide on How to Start a Forex Trading Business and Become a Successful Forex Trader
by Abdul Aziz Mondal Starting a Business Published on: 22 October 2018 Last Updated on: 25 September 2024
Have you researched the currency market? Started following some Snapchat famous traders?
Anyone can start a successful forex trading business, but it’s definitely not an easy feat. Trading takes a lot of studying, dedication, and practice.
If you’re ready to learn how to get your forex trading business off the ground, then this article was written for you.
Read on to learn more.
Learn Risk Management:
Before you start trading, you will need to learn about risk management.
Risk management is a key concept in surviving as a forex trader. It’s an easy concept to understand, however, many traders struggle with actually applying it. The concept is simple: don’t risk more of your capital than you can afford.
Having a good risk management strategy is what will keep your forex trading business from going broke. A standard risk management strategy is between 1-2% of your capital.
Pro Tip: Try using a demo account to practice your risk management strategy. A demo account allows you to make real-time trades with fake money.
Start Forex Trading:
Once you have a good understanding of risk management and have a bit of demo practice under your belt, you can finally start making real trades with real money.
The first step you’ll need to take is to choose a good trading platform. Using a good trading platform will allow you to easily examine and study different currency pairs in forex charts.
Many trading platforms are free or have free versions. You can usually pay for premium versions to get special add-ons and more trading tools. Try using the free version of the platform before you purchase the premium to make sure that you’re able to read and maneuver the charts.
In addition to the platform, you will need to have a good broker.
Brokers are essentially banks that hold a portion of your money. When you are ready to place trades, the broker acts as a middleman between you and the market. Learn more about what a broker does here.
Common Mistakes to Avoid:
Forex trading is like a dance. There is a lot of giving and take.
You are going to lose several trades.
We repeat.
You are going to lose several trades.
There is no exact science to trading, and there are no perfect trading strategies. Watch out for any trader who guarantees their strategy, as this is a marketing technique.
Since there are so many different ways to trade, there are a lot of mistakes you can make. We’ve come up with a few of the most common mistakes that new (and veteran) traders make regularly.
Know that you will make every one of these mistakes at some point in your trading business. But, the key is to utilize proper risk management and try to learn from the mistake.
Overtrading:
It’s very easy to find yourself overtrading. At a young age, we’re taught that hard work equals money.
This is very untrue when it comes to trading. Overtrading is a fast way to find yourself broke.
Emotional trading is a gateway to overtrading. Many traders will open a “for sure” trade, and when the market doesn’t move the way they predict, it can generate a lot of anxiety and anger.
It’s important to have control over your emotions. The market doesn’t care if you win or lose.
A good way to prevent overtrading is to take lots of breaks. Don’t stare at the charts for hours because you’re suffering from FOMO (fear of missing out). When you take regular breaks, you’ll give yourself time to de-stress and think about your trades more logically.
Note: Consider Reading Going Through Novatechfx
Jumping in Too Fast:
Once you learn a bit about trading, you’ll start getting an itch to open some trades. If you’re not careful, this will doom your forex trading business.
It’s important to take your time and really learn how to read the charts. Learn different styles of charts. For example, the Japanese candlestick, line chart, or Heinkin-Ashi.
You’ll also want to study different pairs and different strategies. Remember that different strategies work with different pairs. One pattern that you see on the EUR/USD chart probably won’t be accurate for the GBP/JPY chart.
Take your time before jumping into the trading game. Get friendly with a good demo account. It can be frustrating when you open a really good trade in a demo account but rest assured, there will be plenty of opportunities once you’re better versed in trading.
Thinking You’ll Get Rich Right Away:
With all of these successful traders out there showing off their great trades and huge sums of cash, it can be easy to develop unrealistic expectations. Be careful — having unrealistic expectations is a fast way to burn yourself out.
Trading might be a great way to make some easy cash, but it takes a long time to learn and a lot of dedication. No one builds a successful forex trading business overnight.
Copycatting an Already Successful Trader:
The idea, “if it works for him, it’ll work for me” is very untrue in the world of forex trading. There are many different strategies, where many of them work and many of them don’t work. If everyone used the same strategy, there would be no market.
At the end of the day, the forex market is a giant puzzle that thousands of people are trying to solve at the same time. You have to find your own strategy that works for you.
Ready to Get Your Forex Trading Business Off the Ground?
The key to getting any business off of the ground is to have a good financial head start and to have a team of supporters.
Starting a forex trading business is going to take a lot of time, dedication, and most important practice. The sooner you get started, the sooner you’re going to profit.
If you feel like the currency market might not be suited for you, try your hand at trading the stock market.
Read Also:
Related
