Top 5 Steps to Becoming a Profitable Forex Trader

Top 5 Steps to Becoming a Profitable Forex Trader

Anyone willing can easily become a forex trader, all thanks to a plethora of trading platforms available, countless educational resources, advanced computer systems, and an ultra-fast technology.

However, as much as forex is only a click of the button away, only folks with the right knowledge and skills have the potential of becoming profitable from their trades.

Forex traderControl, discipline as well as positive trading habits contribute to the success of a trader in forex.

Therefore, a serious and structured approach is needed to ensure that, as a trader, you come out of the market at the end of the day with a smile.

So, how and where do you start?

Once you’ve decided to get into the forex market, there’re some top steps that you need to follow to kick-start your forex trading journey as a newbie to becoming successful.

One thing to note is that all the steps require time and effort, but once taken seriously, the results are worth the effort and the wait.

  1. Research

Remember, you’re diving into a new market, which you have absolutely no idea about. The last thing you’ll want is to risk your hard-earned money on something you know little or even nothing about.

Therefore, the first step should be doing a lot of studies and learn everything about the forex market and trading in general.

Start by understanding technical as well as fundamental analysis and the various approaches used in trading forex. Interestingly, there’re several educational resources that you can get all the knowledge required about forex.

Moreover, you can opt to follow a trading trainer or mentor for guidance. Knowledge about the forex market is crucial to becoming successful.

  1. Choose the Right Broker

After learning the basics, you should move on to find the right forex broker. The broker you choose is the one that offers excellent trading conditions.

The broker has to regulated, and you can go a mile to confirm their financial strength by looking at their financial statements.

Also, look at the reviews of other traders to ascertain the broker’s reputation and credibility. Brokers offer the trading platforms; hence, you won’t want to go wrong in choosing your broker.

  1. Choose the best Strategy and Backtest

After the broker, find a trading method that suits you and start backtesting. At this stage, you should remember that no one perfect system exists, but it’s all about what you feel comfortable with while trading.

The system you choose should be the one you understand the most. As you get familiar with the most trading methodology, patterns, habits, some may be making sense to you while others may not. Check the efficacy of the system you pick with the old forex data online.

The system you want should be the one that has already achieved a consistent and relatively stable profit over an extended period- aim at roughly 200 trades as the benchmark.

  1. Demo Testing

Forex trader

Once you’re done with your system, next is testing it out with virtual money.

Open a practice account with the broker you’ve already chosen. Make several trades using the methodology you selected.

It’s recommended that you first attempt to be profitable for a minimum of 2 months and preferably up to 6 months before you invest real income.

With the demo account, you can learn and apply all the knowledge you gained from the start, such as risk and money management.

Learn and practice using the stop losses and all the skills required while trading.

  1. Time to go Live

After at least two months of life in a demo account, it’s about time now to go live; you’re ready to get into the real world of forex trading. Finance your account with real money.

This is the most critical point whereby most traders fail as all the careful planning is thrown out the window, and fear sets in. Ensure that you always stick to the tried and tested principles, no matter what happens. Always stay calm and stick to the plan.

The Bottom Line

Understanding the basics of forex trading is the best route to becoming successful in trading forex.

However, it requires patience and effort. With these five top steps, you stand a chance of becoming profitable at the end.

If things get out of the plan as you never expected, you can go back to step three and select another system, but before that, ensure that you always stay calm and be patient.

Author : Michael Fasogbon

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Michael Fasogbon is a professional Forex trader and cryptocurrency technical analyst with over five years of trading experience. Years back, he became passionate about blockchain technology and cryptocurrency through his sister and has since been following the market wave.