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The Forex Trader’s Starter Kit

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Everyone wants to get into trading these days but there is just so much to it, when you finally get in you will be bombarded with tons of information, far too much for you to work out what it means, let along learn any of it.

To make things a little easier, we have bright together some information and tips on what sort of things you should be focussing on to begin your trading journey, this should help you to get a grip with things a little quicker and to help avoid the information overload that you would otherwise suffer with.

Learn the Basics

Sounds simple enough, and pretty obvious to most, but what exactly are the basics? Learning what a buy order is, what a sell order is, what pips mean, what a stop loss is. These are things that you will be using in your everyday trading life, they are the bones of trading and something that you certainly need to learn early. Going through these basics will give you a good foundation that you can build the rest of your strategy on top of.

Without this knowledge you will not be able to succeed or to learn at a reasonable pace, it will help with working out what your profits will be or what your potential losses may be.

You can get this information from a number of different sources, there are loads of basic guides out over the internet, mentors are available and there are also both free and paid courses. What is important is that you get your information from a single source, to begin with, this will help you learn in a consistent manner. Once you have a decent understanding of what things mean, then you can try looking at some additional sources to see if there are any discrepancies. However, when looking at the basics, most places should be providing you with pretty much the same information.

Develop Your Own Strategy

It can be pretty easy to find a strategy online and then try to follow it, while it may be easy, it is unfortunately not a good way of going about it. Initially, it may work, but when things do not go the right way, you won’t actually know what is causing it to go wrong and as you do not fully understand the strategy or how it works, you will not know how to adjust it in order to meet the changing demands of the markets.

You can start creating your own personal strategy as soon as you gain some of the basic knowledge that we mentioned above. The trading plan and strategy take everything into consideration, your risk, your profits, the currencies to use, and more. It will tell you how to get into the markets and how to get out, it will be your rule book when trading.

Due to this, starting it early will help to cement these rules into your mind and will make them far easier to remember and to stick to, so be sure that you are ready to get your strategy started as soon as possible.

Finding a Broker

There are a lot of brokers out there and you will see a lot of people constantly promoting the one that they are currently using, so it is understandable that it can be quite confusing as to which one you should go with.

The best way of choosing a broker would be to get one that suits the strategy that you are now creating, so you need to match up the requirements of your strategy with the features of the broker If you have a strategy that is going to be taking small profits then you do not want a broker that it offering rather large spreads. So let’s look at what sort of things you should be looking out for to match with your strategy.

Leverage: It is great to have high leverage, but you want to avoid going too high, if you go too high, it can start to put your account at risk as it lets you place trades far larger than you should be, we would suggest not going any higher than 1:500. If your strategy does not need high leverage, then the lower the better.

Commission: Most brokers with low spreads will charge a commission, the range of these charges can have quite a big difference between brokers. You want to avoid those that are charging exceptionally high commissions as this will very quickly start to eat into your profits. Commissions of $6 per lot traded or lower would be what you want to aim for.

Spreads: The spread is the difference between the Ask and Bid price that the broker is offering. Normally lower means better, however, you need to compare them to any added commissions also, most traders are now going for ECN brokers which offer low spreads. If your strategy only aims to take a few pips each trade, then a broker with high spreads will not be very effective.

You should also be looking for various other things that aren’t necessarily related to the strategy that you are using. You want to look around at the various reviews of the broker, whether it is regulated or not. You should also offer a demo account, demo accounts are incredibly important and something that you will require from your broker, it allows you to test out your strategy, so getting a broker with one is paramount to your success.

Get a Demo Account

This goes along with what we mentioned above, you need to get yourself a demo account. You can use this account to test out your brand new strategy, it also allows you to get a feel of how the markets actually work. If you read and learn something new, you can use the demo account to test it out and to see exactly how it works in the real world.

The demo account is invaluable, be sure that you have one and use it as much as you can, it is a fantastic tool for learning.

There is of course a lot more that you can be doing, but those are some of the basic things that you can do and the ways that you can do them to get you started on the right foot.

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