If you’re interested in really starting to improve as a forex trader then it would be best to do so methodically. Assuming you already know the basics of what forex is and how it works, the next four steps that you need to take are undoubtedly the most crucial and you need to follow them – to the letter.
1.Learn about the factors that influence the forex market
Needless to say this is a big step and to be entirely honest the learning never really stops even once you go live and start trading. Still when you first start out you need to at very least learn a bit about the various geopolitical, economic and social factors that can influence the value of a currency. Also you should definitely learn about some of the scheduled events such as data releases that could have a part to play too.
2. Find out more about stop-loss orders and how they work
To put it simply, stop-loss orders are important as they are going to be what prevents you from making heavy losses when you’re trading on the forex market. Before you make your first trade you should already be familiar with what they are and how to set them.
3. Practice on a mock trading account
Most forex brokers nowadays provide mock trading accounts and rather than going ‘live’ right away and risking all your capital it would be a good idea to practice on a mock trading account first. Once you seem to be making a profit on the mock trading account you can then switch over and start really trading.
4. Keep records of your trades
Some trading platforms will automatically keep records of your past trades, but it helps if you keep your own records anyway. At the end of the day by recording your trades (and profits or losses) you can keep track of how you’re performing in the long term and make comparisons when you try a new approach or strategy.
5. Use leverage – carefully
At some point or other you’re going to want to leverage your trades since that’s how you’re going to start making some real money. While amplifying your profits by leveraging your capital is fine, you should always remember that it will amplify any losses you make too and as such should use it very carefully and in moderation.
Assuming you follow these five steps you should be positioned to get off to a good start. Of course there are still bound to be pitfalls and challenges that you need to face, but at least you will be well-prepared to do so.
If you’re looking to start trading on the forex market you should head over to etxcapital.co.uk. It will provide you with an excellent platform to trade not only on the forex market but also in other financial markets such as equities, commodities, indices, and so on. Having that flexibility never hurts, and you may very well decide that you’d like to pursue trading in a different market as well.