Posted by forex at 4:40 AM
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1. Learn the basics of the foreign currency market. Read books, take classes and seminars so that you become familiar with how it works. You must understand how profits are made in the currency market and what influences changes in the exchange rate between two currencies.
2. Study different trading strategies that can be used in the market. As with any other type of trading, many different strategies are available for traders to utilize. For example, you could use a short-term scalping strategy or a long-term trend-following strategy. Learn at least one or two strategies that you feel comfortable implementing on a regular basis.
3. Practice your trading strategies on a demo account. Forex brokers offer the ability to download trading software and trade with a practice demo account. The account is funded with fake money that you use to trade in the market. If you are profitable in your demo account, you have a better chance of being successful with your live account.
4. Obtain sufficient funding to trade with a live account. While you could potentially open an account with only a few hundred dollars, professional traders often have much more capital to work with. For example, according to Baby Pips, it is a good idea to have at least $50,000 to $100,000 in trading capital to start out with. This should be money that you can afford to lose.
5. Use proper money management to ensure that you do not risk too much on each trade. Once you start trading with real money, never risk more than 1 to 3 percent of your account balance on any single trade. Once you start making money, withdraw profits regularly so that you do not leave them at risk.