The sheer amount of information and the diverse range of opinions is overwhelming. Learning how to trade Forex can certainly be daunting.
But everyone has to start somewhere, and the trick is to take it one step at a time.
Getting to grips with Forex is a truly absorbing business; it’s a good idea to have a plan for how to go about it.
Here’s 7 fundamental steps to get you started with learning how to trade Forex:
1. Get familiar with the definitions of Forex terms
You need to know your Bear Candle from your Dumpling Tops. And what about your Market Order or your Pivot Point?
We recommend checking out the free educational material at Babypips. It’s really thorough and easy to follow.
All the Forex vocab can be off-putting – don’t let it hold you back. Just start off with a focus on learning and reviewing what the terms mean, and it will all be so much easier when you start to trade.
2. Choose a broker and a platform
We wholeheartedly recommend Think Markets . You can sign up with Think Markets for free and get familiar with how it all works. And their customer service is excellent.
Through your Think Markets portal, you can easily install your trading platform on your computer. We use trading platform MetaTrader 4. It’s really intuitive to use, and everything you need is in one place.
3. Set up a demo account
This is the key component of learning to trade. This is where you get to try out every idea, without any risk at all.
Set up your account on the MetaTrader 4 platform and spend a good amount of time playing around with how it works.
- Make sure you arrange your currency graphs as you want them – you can change the colors and the sizes. Keep them as simple as possible to start with so that you can really see the candles and interpret them.
- Get familiar with the actual buying and selling mechanisms.
- Check out what happens when you buy and sell with different lot sizes and different leverage – get familiar with how quickly your gains and losses can run up and down.
4. Investigate trading strategies and variables
There are lots to choose from. One of the first things to take on board as you get into Forex trading is that you need to follow a strategy. You need to be able to watch the markets for signals and indicators.
Take a bit of time to familiarize yourself with different approaches to trading. Nial Fuller’s website is a great place to start when getting to grips with signals and strategies.
There are lots of variables to consider when choosing a trading strategy: which market; timeframe; currency; leverage; lot size and so on.
With your demo account, you’ll be able to play around with the variables and test which suits you best.
5. Review your own Forex aims
Which brings us to Point 5: review your own Forex aims to analyse your choice of trading strategy.
- What are your hopes and aims in learning to trade?
- What finances do you have available?
- How much time do you have to trade?
- When is the optimum of the day (or night) for you to trade?
All of these variables will be factors in the most appropriate trading strategy for you.
6. Test a strategy in your demo account
Do not be tempted to skip this part. Make sure you are committed to testing your trading strategy in your demo account.
Test it out for a couple of months. Get yourself wholly familiar with your signals and indictators.
Practise how to begin a trade. Practise placing your stop loss and your take profit lines.
Practise losing. Practise not over-trading.
7. Repeat stages 4-6
Be prepared to take your time when settling on a strategy. Learning how to trade Forex is worth doing properly; think marathon, not sprint.
Review what works for you and your trading aims, and keep building on your trading education as you dive into the markets.