Forex Trading - Quick Start Guide

ByEd Derovic

Expert Author Ed Derovic

Just like any other business, trading the forex market is just that - a business. You do not need a masters degree to start trading nor do you need any special/formal training. This doesn't mean that you should do that, but the fact is that you don't need much.

All that you do need is a credit card (or any other deposit method allowed by the broker), internet connection and basic computer knowledge to install the software and start trading. A quote by the biggest investor of our time Warren Buffer says, "never test the water with both feet" and I think this is a perfect scenario where to listen to his advice.

Now lets get serious, no beginner should start trading with a real money account before trying the demo and being profitable on the demo account for at least 3 consecutive months. The reason is very simple; most of us are emotionally attached to money and so when we start winning we'll enter a euphoric state, when we lose, we'll face emotions of anger, fear, resentment etc.

So don't take this advice lightly, before trading with real money, make sure you can prove that you are profitable for at least 3 consecutive months. If you can't be profitable on a demo account, you will almost certainly not be able to be profitable on a real account. Its much more challenging knowing there is money on the line.

The beginner has to make mistakes and to lose demo money from time to time. This is where you start learning what works what doesn't without denting your pocket. With real money there is no margin to make mistakes and it is also not possible to test new strategies without a very high degree of risk.

So moving on, here's how to get setup:

1. Choose a broker. This is the first and most important step. The broker is the middleman between you and the market. The best brokers are those with tight spreads, no any other charge beyond the spread (beware of some brokers which say the spread is the only thing you pay for, but when you deposit or withdraw money you pay them a percentage and there are some brokers that charge you a percentage when you leave a position open overnight) and the broker should have the fastest execution time possible.

2. Open the demo account and fill the form.

3. Download the software and start trading.

Now with your demo account you will be able to take a peak at the real trading conditions and to see how the market works, all without risking real money. You should be able to see how much a pip is worth, how much spread you pay for trading, how much you can make with the swap and also how to use stop loss and take profit. The demo account will also give you the chance to test robots and indicators and see how they perform without risking money.

Once you've proven you're profitable trading a demo, you can move on to the real stuff. These are the steps to follow:

1. Open a real account with the broker. Choose a broker that has been in business for several years and that does not charge anything but the spread.

2. Deposit some money with your credit card. This is the fastest method and with some brokers you will be able to start trading as soon as you make the deposit.

3. Download the software and start applying with you learned with the demo account. Now this is real and every trade the power to make you money or to hurt you.

Trading with real money is different. It takes longer to execute the orders and when you see the price going up or down including your equity, all your psychology and beliefs will be put to the test. Saying that, once you get good at this there is no limit to the amount of money you can earn. So the fruits are there for those persistent enough.

Trading Forex takes time and patience so do not quit when you have a bad week or a bad month. Keep going, keep a journal, learn from your mistakes and you will get there!

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