Getting ready to start forex trading

TECHNOLOGICAL advancements and widespread internet connectivity have made forex trading one of the most popular and easily-accessible forms of retail investment.

he convenience of trading in forex from anywhere at virtually any time, and the possibility of being independent from a specific office location attract many people to the online world of trading.

Nevertheless, forex trading shouldn’t be approached lightly, or be seen as something too easy that anyone can do without practise and preparation.

Traders should rather view forex trading as a serious investment endeavour that carries with it not only many opportunities, but also many risks.

Those considering investing capital in forex should make sure they’re ready to enter the market by checking five prerequisites.

Education

In order to trade forex effectively, traders need to have a good understanding of the fundamental events that drive the currency markets and of the technical tools that help investors read and decipher currency charts. Trading forex without a strong foundation of how the market works is like trying to fly a plane without having previously taken any piloting lessons and then wondering why the plane won’t take off. Educational material is widely available online, but traders should make sure to get their information from a trusted and credible source. Forextime.com is one such source and offers a whole range of educational articles,
trading seminars, and webinars covering everything a trader needs to know about the market.

Experience

It may sound backwards to say that traders should gain experience before actually starting to trade, but practice and experience are crucial for effective trading in forex. A good theoretical education will offer forex traders the basic knowledge they need to understand the market, but nothing can replace the expertise gained from practical experience. The best way to gain experience and learn how to handle trades in real time is to open a demo account on a trading platform, such as forextime.com, and put what you have learned into practice.

Emotional Control

Lack of emotional control may be the number one factor causing traders to lose money. Although forex trading can seem quite mathematical and brainy when you look at all the charts and technical tools available, the truth is that trading has quite a large emotional component to it as well. Both the excitement of winning and the anxiety of losing trades can cause traders to make foolish decisions that can wipe out their accounts. The best way to learn how to manage your emotions is by practicing trading with a demo account and by having a good trading plan.

Trading Plan

Once traders have a good understanding of how the market works and gain some experience with a demo account, they should start shaping their knowledge of the forex market into a trading plan that dictates when and how they trade. A good trading plan will not only help traders manage their trading accounts better, but it will also enable them to control their emotions by providing clear and well thought-out steps of what they should do in each trading case and scenario.
Mr. Akinyele works with FXTM Nigeria