They say that an average of $5.3 trillion dollars are traded every single day on the forex market, making this the most popular entity of its type in the world.
Whilst the forex market may be vast, lucrative and highly liquid, however, it’s also incredibly volatile and can cause traders to lose far more than they originally invested.
With this in mind, you’ll need to follow several key steps to become a successful forex trader. Here are a few to help you on your way:
Define Your Risk Tolerance
It’s thought that determinism is one of the greatest skills that a forex trader can showcase, as this enables them to understand the underlying laws that govern change and avoid the temptation to make decisions that are led by emotion.
It’s also crucial that you define your risk tolerance, as this will influence your entire trading strategy and the way in which you choose to deploy your capital.
Make no mistake; determining your precise tolerance to risk should come before recognising the core market conditions associated with forex, whilst this type of self-awareness also enables you to set viable trading goals.
Select Your Broker and Use a Demo Account
Your next step should be to identify a viable broker, and preferably one that provides advanced software solutions, high levels of efficiency and accreditation from the Financial Conduct Authority (FCA).
You should also ensure that your choice of broker offers a demo trading account, and one that can be used for a period of between three and six months.
Online brokers such as ATFX definitely tick these boxes, whilst they also offer access to a range of alternative markets and asset classes.
This enables you to develop your skills and diversify your portfolio over time, improving your ability to strategise and develop sustainable profits.
Focus on a Single Currency Part from the Outset
Whilst the forex market can be fast-paced and relatively complex, it’s important that you keep your strategy simple when starting out.
More specifically, we’d recommend focusing on a single currency pair and expand in line with your evolving skills and knowledge, as this will optimise your initial chances of success whilst also making it easier to manage your capital.
This is a common strategy too, with more than 85% of all forex market transactions involving just seven of the major currencies from across the globe. So, don’t be afraid to simplify your approach and manage your expectations whilst you continue to gain experience.
