Step by Step Guide to Learn Forex Trading
With the 24-hours trading opportunity, small transaction cost, and high liquidity, forex trading appeals to everyone. Besides, the exponential growth of the market is also another main reason for the attraction. However, the risk on forex is undeniable. Therefore, as a trader, you will need to learn forex trading to understand it and maximize your profitability. Whether you are a newbie or an expert trader, you will need to be involved with the forex education, learning process continuously, as you will always need to study the market and make strategies accordingly.
So, we have made a guideline for forex education, which anyone can follow to get the expected return on investment. Besides, you will also get to know the learning resources to hone your skills.
Learn Forex Trading with Step-by-Step Guide
Learning forex is a tough task, and it takes a handsome investment, dedication, and time. So, learning the core of forex is highly essential. You may follow the steps we have provided below to grasp the forex trading knowledge.
Promise Yourself to Learn Every Single Thing About Forex
Whenever you want to be an expert on anything, you will need to learn everything about that particular stuff. Hence if you are totally new, we will suggest you learn every possible thing in forex trading. However, it will take time to get knowledge on everything as forex is a huge field.
Initially, you will need to understand the trading instruments, as there are many asset classes other than forex. Therefore, it is mandatory to know all the basics as well as the phrases and terms related to forex.
Most newbies think forex trading is gambling, which is a wrong idea. Forex is basically a game of probability, and you will need to know its working procedure. So, you should not make any trade without understanding the procedure. And here, your patient is the most important thing you will need to have. Further, you will need to keep in mind that the learning process will never end.
Choose Broker Wisely
After you decide to start forex trading, the very first thing you will need is the broker. The best forex broker is the gateway to the $6.6 trillion forex market. Hence, you have to be cautious while choosing a broker. You may need to look for the forex brokers reviews to see the recommendations of the brokers.
If you follow the first step properly, you will understand which broker to choose. There are thousands of brokers available currently in the market, and it is evident that you will need to compare the forex trading platforms and brokers.
But for the newbies, the rule of thumb is that you should select the popular broker with a a huge number of traders. You may select this type of broker after checking their reviews on our website.
Open a Trading Account
After selecting a broker, opening an account is the third step for the forex trading education. However, you will find a wide range of accounts offered by the brokers, and as a beginner, you might get confused with all those offerings. Therefore, our suggestions are to open an account that doesn’t want a huge amount of money. You should open the account with the minimum deposit.
You may also open a demo account, but we are opposed to the demo account as this provides false hope to the traders. So, opening a real account is a great way to learn forex trading from scratch.
Access the Trading Platform
Forex trading platforms are the medium that connects the traders with the forex market. However, you don’t need to worry about the platform as it comes with the broker. So, you will need to check the platform too while choosing the broker. There are many platforms available in the trading world. But, a very few of them are popular and actually work, such as MetaTrader 4, MetaTrader 5, cTrader, etc. But for the beginners, MT4 is a perfect choice, and most of the brokers use this.
Now, you will need to understand the platform and know-how to use it. However, your broker and the platform itself will provide the guideline to use the platform. After understanding the platform, you are almost ready to hit the market.
Formulate a Risk Management Strategy
Having a proper plan is highly necessary before you start any trade. At this point, you are free to start a trade but, our recommendation is to set up your strategy, including the entry and exit plan. Typically, the strategy will help you to minimize the loss at the same time provide you some return and even maximize the profit.
With the proper risk management strategy, you can trade for a longer period, and you can learn from that too.
Learn Analyzing the Forex Market
This is not mandatory but needed to become a successful trader. If you can learn to analyze the forex market, it will enhance your forex trading. As a result, your chances of generating some profit will increase.
However, there are multiple ways to learn forex analysis. The analysis can be technical or fundamental. The technical analysis will get you an idea about different tools, which are known as indicators. Nevertheless, the technical analysis can boost your trading capability.
On the other hand, the fundamental analysis will get you the known-on market movement based on some criteria and historical data. You may take GDP inflation, economic calendar, and employment into consideration to have the fundamental analysis.
Finally, you are ready to make a trade and access the real forex world. This is the main part of your forex education, as you will never learn until you start practicing. Here you can apply all your theories you have learned above and check how the theories are related to the practical.
However, you will have to remember one thing; you may not get the return immediately, and having a loss initially is normal, perhaps evident. But any loss or gain will be your forex trading education opportunity. If you can continue trading slowly, you can learn forex trading steadily.
Alternatively, a failed strategy might work next time. So, make sure you did your homework right before you jump for the trading.
Learn Trading Style
Now that you have joined the forex market, you can now apply different strategies and sort out the methods that work for you. And applying different forex trading strategies is a never-ending process as the same strategy might not work over and over. Hence, trying new things is recommended.
The most common forex trading style is day trading and swing trading. Day trading can give you the benefits of opening the trader in the morning and closing before the market closes. On the other hand, the Swing trading style is used for the long-term strategy that keeps the position for several days, weeks, or even months too.
The Newbie traders may not come up with the day trading; hence, they can try the swing position. As time goes by, you will become experienced and start day trading.
Maintain a Trading Journal
The journal will ease your forex education. Normally, you can track your daily trading activity and take notes on your learning. This can help you in the future if you take trading seriously and want to be one of the top traders. Moreover, with the help of a journal, you will know what works for you and what fails you.
Initially, losing any trade might hinder your motivation, but you will have to keep going regardless of the outcome. Some traders take forex trading as a game and stop trading after a couple of losses. If you want to see success and build a career in forex trading, it is compulsory to keep going with the trading.
So, these 10 steps can make you a successful forex trader. However, you can enrich your trading knowledge by taking some forex trading courses. You will find many forex trading resources; you can check out the following websites to learn forex trading.
Resources for Forex Trading Education
If you have an honest intention to learn forex trading, you will get thousands of resources online. But as a beginner, you may not know which one is beginner-friendly. Hence, we have listed few resources that can work as forex trading courses too.
- Investopedia: You will find the answers to every possible question of forex.
- BabyPips: The new traders may find Investopedia’s language difficult. Hence, you can try BabyPips for better understanding.
- The Balance: You can read numerous articles on forex and enhance your skills.
- Bloomberg TV: Bloomberg TV is solely providing all the updates on financial markets. So, this can be a great learning tool for anyone.
- YouTube: Nevertheless, YouTube has become a great tool for anyone to learn anything, and learning forex trading is not an exception.
Forex trading education is a lifelong process, but it is fun to analyze the world’s financial market. With the start of the internet age, learning forex trading has become easier. Unlike the 1990s-2000s, a lot of knowledge bases are available and helping people to learn forex trading from home. Hopefully, this article will help you to sort out the forex education process.