Getting started with Forex Trading can be intimidating and complex for those who are just considering exploring the world of forex trading. Contrary to popular notion, getting started with forex trading is infact really simple and easy. What it takes is a bit of time and understanding on how the financial markets work and also in identifying your trading strategy and style which usually takes a few months to a year to perfect the art. It is true that most new traders who are getting strated with forex trading usually end up most of their capital within the first three months.
A large part of this can be attributed to the fact that the moment new traders start to taste the profits, greed takes over logic and they end up losing their initial capital as well as the profits that they have generated. One common mistake made by beginners in forex is that they tend to trade the markets on gut feel rather than logic. Forex trading requires a lot of discipline. This is an understatement to be honest. It is little wonder as to why more and more books are published that emphasize on forex trading discipline. It is little wonder as to why they get sold so quickly.
Getting started with Forex Trading – What you need to know
Even before you rush off to create your demo account and get a feel for the markets, there are some basic aspects new forex traders need to understand. Without having a strong foundation, there is no guarantee of long term profits. We say long term because that is how forex is supposed to be. Long term profits, instead of focusing on short term, intra-day trading which can only bring you profits over a short period of time and can potentially make you lose your money just as swifly; which isn’t the purpose.
Below are some quick tips to help beginners get a feel for the forex markets and to set off on the right foot when you are getting started with forex.
- Forex trading is not gambling: The word gambling is rather a broad term and can be used in many aspects. As mentioned earlier, trading forex based on gut feel is perhaps one of the biggest reasons many forex traders fail in the first couple of months. Trading forex requires application and strategy, which admittedly can be boring, but is greatly beneficial towards bringing you profits in the long term. Having strong foundations in the most basic of aspects such as Fundamental Analysis and Technical Analysis will help traders grow not only in their approach but also in increasing their profits
- Forex trading is not a get rick quick scheme: Playing on a potential trader’s ego, the message of getting rich quick seems more than appealing to many, which is why there are so many traders who give up within the first few months of trading the live forex markets. Cliched as it may sound, there is no shortcut to success and the same holds true with forex as well. Getting started with forex trading is just the first baby step. There are so many concepts, definitions one needs to comprehend before they can even start thinking about profits in forex trading.
- Forex Markets has its risks: Every investment product, whether it be your 401k plan or a mutual fund that you invest has its own pros and cons. The general philosophy is that the less risky a financial product is, the lesss chances of profits that can be made. Forex trading brings a bit of a balance given that traders can change and suit their trading styles based on their risk exposure. You can be a trader who can be really aggressive and doesn’t mind risking a couple of thousand dollars in a trade and you could also be a trade who only trades a few hunderd dollars per trade that is set for a long term. The advantage with forex trading is the fact that it allows traders complete flexibility to build their investment/trading styles.
- There is no best forex broker: Most beginners who are getting started with forex trading usually tend to approach with a mindset of finding the best forex broker. Truth is that there is no best forex broker. All the marketing hype aside, the basic reasoning being the fact that every forex broker is unique in their own way and bring their own pros and cons to the table. The onus lies on the forex trader to find a forex broker that offers the most ideal trading conditions and the best spreads or commissions.
- You don’t have to trade full time: Most new forex traders who plan on getting started with forex trading think that the only way to make profits in forex trading is to trade the financial markets full time. This is a myth and is incorrect. The financial markets are open close to 24 hours a day, thanks to the time zones. So if its the USD, EUR, GBP or JPY that you want to trade note that the currencies are based in different time zones. You can always pick a time to trade forex that is most convenient for you, if it meets your trading requirements and style.
Getting started with Forex Trading on the right note
Almost every successful forex trader you might come across today has pretty much started off on a clean slate just as yourself. This is something big to consider as it clearly points out the potential in forex. Of course, it doesn’t take the swish of a magic wand to make you a millionaire overnight. One of the main aspects to consider before you want to get started with forex trading is to set realistic goals.
Beginners in forex do not need to spend hours and days in a row to learn up the basics which can in fact make you lose interest, but rather to have a balanced approached. A bit of reading on the basics, following the daily market and business news can help you to maintain the interest and push you forward towards being successful as and when you consider getting stated with forex trading.