It sounds so enticing, right? Just open a forex account and tinker around on the side, making money trading forex, and before you know it, you’re earning thousands of euro’s a month, giving you the freedom to quit your 9 to 5, travel the world and live like a millionaire.
I don’t think so!
However it’s the dream lifestyle, and everywhere you turn online, someone is offering to sell you a forex trading course, claiming they can show you how to make money trading forex.
Don’t get me wrong, there are loads of online forex training courses out there that do exactly what they say, but how can we differentiate the legit courses from the not so trustworthy ones.
I have compiled a list of MUST DO’S before you can start making money trading forex.
Ultimate Guide to Making Money Trading Forex
Here’s what I’ve learned about making money on forex – the truth is that most forex day traders fail! Learning forex it’s not an easy process to go through. For this reason, I have prepared this guideline for you that will walk you through the learning process of Forex trading. I believe it is a good way to string you up for the real deal.
- Do your Homework
It’s vital that you research as much as possible about trading forex online. If you’re looking for a mentor, spend time looking, use the internet to find established forex traders that have authority in their industry. Join online forums and ask the members in there. Remember every forex trader started at the beginning.
Compile a list of potential mentors and check out their websites, what do they offer in their services? Does what they offer suit you and your budget? Remember it’s all about “YOU” and what suits you best.
- Search for a Reputable Broker that Suits You
Next up is looking for a good forex broker. There are hundreds, so how do you choose one?
Since you’re starting out and only learning how to trade, choose a few and see how their platforms look.
If you search in google “Top 5 Forex brokers” the results will show up the top paid searches first.
Check out the reputation of these brokers, as well as if they are regulated by a higher authority. You don’t want to end up being scammed by some of the companies in this industry, getting involved in a forex legal dispute.
- Open a Demo Account
It’s fairly easy to open a demo account, you just need to register with your email address and your set.
Play around with each of the demo accounts and get to know them. You can always contact the broker support team and they would be only too happy to help with any problems you may have.
One thing to remember is that after you open these demo accounts, their sales team will try and pressure you to open a live trading account.
Just explain that you are new to trading and you’re not ready to move to a live account.
- Learn Risk Management
Risk management is the most important element to start making money with forex. But what is a risk manager? Again we resort to Google search, the definition is shown below:
You need to become a specialist in identifying possible risks to your forex trading account to minimize account erosion. Don’t take this lightly, this is easily the most important factor on becoming a successful foreign exchange trader. Fail to implement this will result in certain failure.
- Get consistent
A common mistake that the majority of novice retail traders make is jumping onto a live trading account before they’re really ready and trading consistently.
In truth, I was one of those traders. I got a string of winning trades on my demo account and thought I was ready for the big league. How wrong could I have being.
Trading a demo account is nothing like the real deal.
“This is where boys become men”
The fear and heart palpitations you experience when you click into your first live trade cannot be replicated on a demo account.
Your heart is racing, your palms are sweaty and you start second guessing your analysis that got you into the trade in the first place.
So the transition needs to be made only and ONLY when you have been trading consistently on your demo account for several months.
- Open a Small Live Trading Account
You’re ready, you’ve done your homework and have picked a forex broker that you’re happy with. It’s now time to open a live trading account.
Don’t do what I did!
Be smart, you’ll thank me later for it.
I opened a live account and transferred €10,000 into it with no hesitation.
Coupled with not really knowing what I was doing, I threw away hundreds of euro within a few days. My risk management wasn’t a problem, in fact it has always been my strongest trait.
I didn’t have a solid trade plan, reliable strategy or the brains to start with a small forex account.
Over time losing trade after trade my confidence suffered, the fear of losing so much money had taken its toll. So I started hesitating when an opportunity setup, only to click in after the move had commenced and then watch price come back to my entry and my stop loss.
Not a nice time in my life.
So I urge you to start off small, an account with a couple of hundred euro is ideal to get your toes wet, take this time to build confidence and grow as a forex trader.
- Keep a trading Journal
Another great piece of advice I will share with you is to keep a trading journal, log all your trades daily, take note of “time of entry”, “currency pair traded”, “entry & exit” all the necessary information so you can analyse the trade after it has been closed.
- Prepare well
Preparation is crucial, so I urge you to do market analysis at the end of every trading day and over the weekend. I love doing weekend analysis and I even record a short analysis report and post it on YOUTUBE every weekend, here’s a link to my YOUTUBE channel.
- Treat it like a business
Treat your trading like a business, have set hours you trade with no distractions.
I still battle with this part of trading on a daily basis, with so much social media distractions around, it can be hard to keep focused while trading.
I hope this article will help you in some way, whether it be finding a forex broker, a forex mentor or playing a small part in your quest to make money trading forex.
I would greatly appreciate if you share this post or even comment below, I love hearing from my readers.
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