Forex trading is a great way to make a bit of money in your spare time and something that can turn into a full-time career. Through buying and selling currencies there are countless opportunities to profit as they change in values based on many different factors. It can take a while to become an expert in the world of forex and if you head in unprepared you can be in for a nasty shock. Therefore, it is essential that you have answered all the following questions comfortably before you begin trading forex.
What Are My Goals?
The main goal for anyone trading forex is of course, to make money. More specific short and long term goals are required to help determine how you will go about exchanging currencies though. It could be a simple target to aim for of what you want to earn each week, or just to win a couple of trades. While a long term goal could be to profit even more or earn enough to rely on forex trading as your sole source of income, for example.
Do I have a Trading Strategy?
There are hundreds of different forex trading strategies and it is essential that you choose or build your own before you begin buying and selling currencies. If you just go in without a plan, then it’s highly likely your forex career will be over before it has even begun. Many factors will influence the strategy you choose, such as what your goals are, how much you intend to trade, at what times and how much of a risk taker you are.
When Will I be Trading?
If you are only thinking of trading forex part-time then the times you will be able to trade at will be limited. This can inform the currency pairs you will be best trading, depending on whether you decide to be a day or night trader. The forex markets are open 24 hours, 5 days a week as there are sessions open in Sydney, Tokyo, London and New York and more that all overlap. Decide when you will be trading and which session(s) to find the best currencies to trade at those times.
Where Do I Find the Best Platform?
When you have a strategy down and are ready to begin trading, you’ll need to choose a platform to use. FxPro MetaTrader 4 and 5 platforms are two of the most popular, offering many trading opportunities, fixed and floating spreads and an easy to use interface. Look for a platform that can be used across smartphones and tablets as well, so you can trade on the move, and one that includes a demo account which allows you to practise trading first.
Can I Automate This?
Especially if you are only trading forex part-time, it is incredibly helpful to automate various aspects of your strategy. Not only does this save you time, it also removes some of the emotional element of trading which can create problems. Ensure you set precise entry and exit points which you would otherwise follow anyway, and which won’t lead to riskier strategies than you would normally take.
Is This Working?
Once you’ve used a demo account to practise trading and test the success of your strategy, it will be time to begin trading for real. You should regularly assess your trading results to ensure that the plan is working. If it is then you will be fine to continue doing as you are, but if there are problems it can be worth seeking expert help and adapting your strategy.
Once you’ve confidently answered all these questions you should be ready to begin forex trading as soon as you feel ready.
