Many people come to the market knowing nothing at all about it. On the one hand, this is not surprising given the active advertising and activities of various bloggers. On the other hand, the lack of awareness of retail clients of brokers often leads to loss of funds. How do you avoid the minus and get a stable income on Forex? We will answer all the basic questions and describe the primary conditions, but if you want to start trading immediately, use cheap Forex VPS.
Condition No. 1 – Basic capital
If it is possible to take advantage of the bonuses described earlier, then the base capital will be the money given by the broker. Convenient, without risks, you can work calmly. But for some, $100different from not the amount that is interesting for work. In this case, some people will not be interested in the market due to more income than possible with $100 on Forex.
And here, you need to determine a critical point for yourself – how much money you will lose and not experience problems. Each case is individual, but it really should be this amount. Otherwise, a negative result will cause a chain reaction of problems, and the trader will no longer have time to work in the market. Unfortunately, this is a common problem. Therefore, we allocated an amount and believed we did not have it; this was the only way to calmly develop and achieve success.
Condition No. 2 – Special knowledge and experience
In the entire history of financial markets, there has not been a case when a trader is earning money without having special knowledge. It will be like roulette – once you get lucky, you lose. If you intend to make stock trading your primary occupation and make money in Forex, you will have a lot to learn. Let’s briefly list the main points:
As you can see, everything is more complex. The trader requires effort and time. But everyone who makes money on Forex has gone through this path and should only think that it is possible to be different with knowledge. You cannot become a professional and achieve success. This fully applies to financial markets.
Condition No. 3 – Nerves of steel and time
Probably everyone has seen photographs of trading on stock exchanges. Some traders look enthusiastically, others are on the verge of despair, and others look thoughtfully at the charts. And even this does not fully reflect the psychological stress that a trader receives. You sit in front of a monitor or smartphone and see in real-time how the result of a transaction is constantly changing due to price fluctuations. Let’s add loneliness here; there are no traders nearby with whom you can worry and reduce stress. You need to control your emotional state; otherwise, it will be difficult. The second point is time consumption. Didn’t close the deal late at night and are worried about the result? This means we are waiting for the opening of trading in Asia and continue to monitor. And if the market is sluggish, you can “monitor” until the following day. Earning money on Fois differs from what we see in motivational materials and movies.
Condition No. 4 – Cash reserve
This is partly a continuation of the previous condition; additional factors exist. Firstly, no one is immune from failure. You can get several losses even if you follow all the rules and recommendations. If you give in to emotions, you can make even more mistakes. This is especially true for newcomers to the market who want to “win back” in case of losses. Secondly, sometimes additional funds may be required to maintain a position. A trader should have a deposit and some reserve of 50-100% of the deposit amount.
HOW TO MAKE MONEY ON FOREX – STEP-BY-STEP INSTRUCTIONS
So, let’s assume you are determined to start trading in the foreign exchange market. This will require several steps before you can begin the process. Next, we will describe each stage, explain why it is essential, and how it will help the trader avoid mistakes. Before the spread of the Internet, everyone walked this thorny path on their own. Now, everything has become much more straightforward; you can quickly learn how to work in Forex and earn income.
Step 1. Choose a Forex broker
This is a critical point from which serious trading begins. The company that will act as an intermediary between you and the international foreign exchange market will play an essential role in the final results. Brokers differ in their terms, list of services, and reliability. Therefore, when we study various independent ratings, we pay attention to the following:
- Availability of a license. If so, which one – offshore or serious jurisdiction;
- Trading conditions – spreads, swaps, commissions;
- List of trading instruments;
- Methods for depositing and withdrawing funds;
- Trading platforms. It is desirable to have MetaTrader version 4 or 5.
- We are also looking at bonus programs; extra funds will be good, especially when starting trading without investing your own funds. As a result, you can select 5-7 exciting companies and read the reviews. Nothing prevents you from trying to work in one and then moving to another.
Step 2. Decide on a financial instrument
This material is intended for beginners. Therefore, we will immediately recommend trade only the main currency pairs. These include pairs with the American dollar. They account for the most significant turnover and are less susceptible to manipulative movements. As you gain experience, you can switch to cross-paiSome strategies designed for one specific pair, for example, GBP/JPY. This is Forex’s most flexible trading tool, and its earnings can be huge. As, indeed, are the risks. This is why beginners should work with essential pairs at the initial stage. In addition, there are more different analytics and valuable information for the leading pairs. The most important one is EUR/USD; you need to remember this.
Step 3. Go through the training stage on a DEMO account
The demo or training account, as it is also called, fully corresponds to its name. It is designed so that a beginner can try trading and look at the market from the inside and within the framework of the trading process itself. Let’s give a brief description:
- The demo funds are not real; there are no risks;
- Usually provided for a limited period, but there are options to extend;
- The charts on the demo are entirely consistent with the charts on real accounts;
- Trading conditions are idealized – there are no slippages, orders are executed instantly;
- Quick registration and complete data are not required.
Step 4. Open a real account
You need to move on to actual trading after training and gaining knowledge on the demo. To do this, you will need a trading account replenished with real funds. Typically, brokers offer several types, with ECN being the most interesting. These accounts are characterized by a very high speed of executing trading orders and work fully even in conditions of increasing volatility when news is released.
Step 5. Enter break-even trading
This is the most critical stage in a trader’s career. Despite all the training within the demo account, the results must be later. The point is not that the trader does not follow the rules but is simply nervous because the psycho-emotional state when working with real money will be completely different. The fear of receiving a loss and the desire to fix a small profit violates the Forex trading system built by the trader.
Conclusion:
Earnings and losses are an integral part of understanding everything. It takes time and being calm about situations when a stop loss is triggered. Therefore, reaching break-even trading can be an essential milestone; further work will be much easier. The trader will gain the much-needed confidence and calmness. Read also Why is VPS a Cost-Effective Hosting Solution in Netherlands?
