Regardless of whether you think trading foreign exchange trading is a legitimate way to earn an additional stream of income or not; consider that you have already participated in the process. Every time you buy something that does not say "made in the USA". - you have contributed to the exchange of international currencies, and on behalf of all ForEx Traders around the world; thank you for doing business with us. For the past 3 years, a seasoned ForEx Broker has consistently paid me between 5 - 14% returns MONTHLY on my investment with them. I, in turn, have had some decent returns on my adventure to become a successful ForEx Trader.
- Skill level:
Things you need
- To become a ForEx Trader, you need:
- • a computer, preferably with a wide screen monitor. Multiple monitors are even better.
- • high-speed Internet. Dial up is not recommended.
- • learning resources.
- • a demo account to simulate the live experience without losing real money.
- • a willingness to learn everything you can about trading ForEx.
- • a live trading account. £325 will open a mini account with many Brokerage firms.
- To become a successful full-time Trader, you will also need to:
- • have sufficient capital to participate in large profits
- • have your finger on the pulse of global news,
- • be quick to spot trends on charts,
- • develop effective trading strategies,
- • be able to be patiently wait for the profitable trading moments, and
- • be correct in more than 50% of your trades,
Decide if foreign exchange trading is an opportunity you want to explore. Foreign exchange trading for profit is not new, but non-institutionalised foreign exchange trading, is a new and exciting way for anyone to earn extra money. In fact, for some, this type of trading is lucrative enough to allow them to quit their day job. Foreign exchange trading from here on referred to as ForEx , is also referred to as forex, FX and spot trading in industry jargon.
Understand how ForEx creates an income stream. ForEx Trading is in effect the exchange of international currencies with a goal to extract profit in the exchange. ForEx is always traded in pairs. The currency pairs most often traded are the US dollar and the Euro - USDEUR, the US dollar and the Japanese Yen USDJPY, the US dollar and the British Pound USDGBP and so on. For example, you are going on a long awaited vacation to beautiful Jamaica. You show up at the airport and exchange your US funds for Jamaican currency at the going rate. Let us assume at that moment, the exchange rate is 60p US = £45 Jamaican and you traded out £65 US for £4,550 Jamaican. Since you are having so much fun, you decided to trade out another £65 US, but this time the teller handed you £5,200 Jamaican. There was no computation error, the Jamaican dollar value changed against the US in your favour giving you 14% more in return than the day before. Now imagine this scenario repeating itself several times per day via Internet from the comfort of your home; and you now understand what it means to live the life of a ForEx Trader. By the way, a 14% - 60% return on a single ForEx transaction, or group of transactions is not an impossible rate of return for ForEx trading. Excited? OK, here is how.
Obtain the necessary tools. Data feed is crucial for ForEx trading as the value of any given currency changes by the second. High-speed Internet is mandatory to extract profit with the changes in the rates. ForEx Trading can be done wherever you have Internet access, so feel free to make your vacation cottage your permanent home. Unlike the New York Stock Exchange and other financial institutions, the ForEx market is open for trading 24 hours. There are many charts you may want to reveiw before making a trade decision. The more monitors you have, the more charts you can see at one time, the more confident your decision to execute a trade.
Learn the Business. Just as with any new career, training is necessary to become a ForEx Trader. ForEx is not the kind of trading you can figure out as you go. Trial and error is definitely part of the learning curve, but since errors mean losing money, learning the business is not an option. To learn more about ForEx, in addition to resources you might find through a search engine, check out the following books: 'Trade What You See' by Larry Pesavento and Leslie Jouflas, and 'The Secrets of Economic Indicators' by Bernard Baumohl.
Practice what you have learnt and create trading strategies Once you have invested some time in learning how to become a ForEx Trader, applying your knowledge in a live simulation is the next step. Most ForEx Brokerage firms offer free Demo accounts that mirror their live versions. These demo accounts offer between $10,000 to $50,000 demo dollars to practice your trading. The currency rates are the same as the data feed in their live account versions so any profit/loss you incur are an exact replica of how you would have performed. Even professional Traders continue to use demo accounts to test and back test new strategies. To find free ForEx demo accounts, you can do an Internet search, or check the resource list here.
Open a live trading account and start trading for profit. Armed with the confidence gained from profitable trading in the demo account, it is now time to make bankable profits. Convert your demo account to a live account by depositing money as per the site instructions. If your Brokerage offers a mini account, you can start trading for profit with as little as $500 which can then be leveraged into multiplied profits.
Keep a journal As you trade, keep a journal or track your strategies in whatever way works for you. Tracking your strategies is the only way to determine what works and why. When you find a strategy that works, work the strategy consistently and watch your account grow its way to offering you a better quality of life.
Tips and warnings
- Journaling is easily the most overlooked step, but probably the most vital. PLEASE take the time to journal any new strategy you attempt, as well as the outcome of any repeat attempts of prior strategies. The time of day, the currency pair traded, the economic reports scheduled are just some of the uncontrollable variables that will significantly change your outcome.
- If you have ever traded stocks or options, then ForEx will be easier for you as the charts and often the platforms work the same way. In fact, many platforms for stocks and options offer a ForEx opportunity that is simply a click away. The biggest difference is the potential profit is greater in ForEx, the rapidity and liquidity of extracting your profit is even easier with ForEx. There are no company profiles to reveiw, nor will their performance, or lack of, matter to your bottom line. The ForEx community is gazillions of coporate, institutional and private personal computers tapping into a trading system and the sheer volume of those trades drive the market. This is as close to the purest example of demand and supply determining price as you will ever see.
- ForEx Trading may involve the loss of your investment and therefore any money invested should be considered at risk. Do not risk funds if that loss will impact your personal well being. I have nothing to gain by suggesting you consider ForEx Trading, nor do I profit in any way from any resource suggested in this article.
- Whether you have a successful day of trading, or a day when you wish you could bury your head in the sand; remember, past performance is no guarantee of future outcome. This can be both an encouragement and a warning to those brave enough to try ForEx Trading.
- Some trading platforms are more user friendly than others, and some are definitely geared to the professional. Use the free demo accounts to confirm if a ForEx Trading platform is right for you before committing funds to the live version.
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