Trading forex for a living is great idea that can either make you or break you. In order to ensure that things in your trading for a living work perfectly, there should be some preparation. Preparation here does not only mean getting to vastly understand the market but also preparing enough in terms of the right equipment you are going to use, risk management measures and inner ability to withstand the market. This article therefore takes into consideration all the preparatory steps you will need to take, the equipment, tools and many more you will require, the risk uncement that come with trading and how to create an inner personality that can withstand the trading forex as brothers.
Building a Strong Foundation in Forex Knowledge
As in indicated above, before you even start contemplating about trading forex for a living, you need to lay a strong understanding and bases of the forex market. This is not only having an overview of how you can buy and sell the currency pairs in the market. You will need to have a deep analysis of the technical analysis, fundamental analysis and how the global economic news can have an implication on the prices of currencies for the customers.
To get ready to start a forex trading career, you should go through 3 steps, and already after that, you’ll be ready to start trading live accounts. A forex education will become the basis of your trading, so:
1. Use some education — forex courses, webinars, books — everything to get as more knowledge as possible of the subject during an educational process.
2. Develop by practice on demo accounts — use the demo account feature to perform a lot of operations. And remember, that with them, you won’t risk any real money, it’s just a simulation. However, it’s required to face your results. A trading diary should be your assistant. You should present all your actions and write down your movements, with an explanation of what motivated you to act in such a way, at the place in which it led. It’ll help you to understand afterward how it needs to be done.
After using the gained practice, new information, and education, you’ll become ready to start real live trading. The last step is to present the main equipment you should have. Simply speaking, it’s essential to have the right pack to make that at-home trading convenient and easy for you. And as your trading station will be the main part of your business, of course, it should be appropriate.
Equipment You Need
It’s essential to have the right pack to make at-home trading comfortable and easy. Your trading station is the main part of your business, so it should be appropriate.
Equipment:
1. A Reliable Computer: Purchase a necessary model and provide your computer with access to the internet. Since the trading platforms demand a lot of memory, you should also have a high processor speed.
2. Several Monitors: It’s of great importance to have a broader outlook. You can use from 2 up to 4 monitors. Having a multi-monitor stimulating up your environment allows you to observe news feeds, critical market indicators, and charts of different markets. You won’t need to switch the monitors all the time, and keep an eye on all of them at the same time.
3. Good Internet Connection: Reduce the risk of losing your money while trading with stable and high-speed internet. Create and back up a plan allowing you to connect to the internet even in the case of outages.
4. Trading Software: Register and use the professional online exchange’s trading platforms that include precise charting sources, up-to-date info., and real-time execution on trades. The most popular ones are MetaTrader 4/5, cTrader, and TradingView.
5. Broker: It’s important to use an ECN broker with low spreads, quick executions, and safe services. The broker must also be officially regulated.
Risk Management Strategy: The Key to Long-Term Success
No matter how good a trader is, it is impossible to succeed in the long run without proper risk management. In other words, you should always make sure you protect your capital – whatever the conditions, it is your number one priority. A proper risk management strategy will offer you the means to stay afloat through bad cycles and prevent one single bad trade to ruin your entire account.
Risk Management Tips
Risk per Trade
The first thing you need to remember regarding risk management is how much money you can use in every trade. In this case, this sum should not exceed 1% or 2% of your trading capital – this way, a losing streak will never lead to catastrophic consequences for your trading account.
Position sizing
One thing you always need to keep in mind is that position sizing is key. In other words, you should always know what lot size to use in a particular account depending on the risk. For instance, a position size calculator will make sure you are not risking more than you can handle on a single trade. For instance, if you are risking 1% of your capital every trade and you are entering risk trade with a stop loss of a 100 pips when you have a stop-loss level, you should check how many lots you should buy in order to.
Stop-loss Orders
Of course, you should always use stop-losses to make sure your losses do not spiral out of control. In this case, you need to set a stop loss order at a level that will make the brokerage firm close the position should the market go in this direction. You will lose money, but the damage will be limited to your trading account.
Take Profit Levels
Lastly, alongside setting down stop-loss orders, you should always select the take-profit levels before entering your trades. This way, when the market goes to this level your winning trade will be closed and you will get your profit.
Leverage
Lastly, leverage is a double-edged sword. It can maximize your profits – as well as your losses. Do not use it too much under any circumstances, and be wary about utilizing it in general.
Psychological Preparation
Have you ever realised that it is not that much about the tech but more of psychology when you start to trade forex for a living? Also, it may be heavy to lose and even win, and you have to handle it at a top level. Therefore, one of the most critical schools is to develop a strong mindset and prepare yourself for a profitable yet nerve-wracking job. You may ask, then, what are the prominent steps to become psychologically fit?
Ideally, if a trader becomes somewhat loose regarding the process. It may first sound natural, but you should not care that much about the money, win or lost. Nonetheless, you must always follow your trade plan and avoid any excitement. To be a successful professional and have a profit, you have to relax, go with the flow, not to smash it.
Maintain your strategy. Establish the game and start it. If your plan is flawed, you have not any chance to trade it steadily. Meanwhile, if your strategy brings you regular income, your only duty is not to disregard it but keep doing. Such performance will provide you with a permanent win.
Do not ever be afraid of a loss. People must lose money if they wish to win some as the market is designed to take your profit. It may sound awful, but no one has the duty to win every trade he starts. Having the strength to get used to the idea, recover, and get profit once again is what makes you rich while trading forex.
Enhancing your mental state. Of course, some tactics could work for you, but you should also work on your mind and be used to stress. To be capable of focus and stand under constant pressure, you must work on it.
Stay realistic. Almost all freshmen in the forex game believe they may become millionaires overnight; nothing is as wrong as such idea. As well, playing the professional trading is more equal to marathon or endless race but not a 100-metre sprint.
If you want to trade forex to make a living, you have sufficient preparation, both technical and psychological. First off, make sure you have the proper equipment and a strategy to handle the risks. Then, buck up and be mentally capable of handling the emotional rollercoaster of the forex market. In any case, with the right degree of preparation, a well-established plan when making transactions, and the resolute determination to act on this plan, your success within this competitive sphere is assured to grow.