Three steps to become a Forex trader

Despite all the concerns the number of those who want to be a trader increases. The possibility of making easy money attracts many people. But it is not so simple as it may seem. How to become a Forex trader? How much money would it take? Let’s consider how to trade on Forex market and Three steps to become a Forex trader.

1. Understand how currencies are traded

First, you have to understand how currencies are traded. There are three critical terms to learn:

• Exchange rate or quote and Pair
• Pips
• Spread

Forex quote: EUR/USD 1.3325 BUY / 1.3315 SELL

Each quote is composed of two parts, the pair and the rate. Pairs are the “items” traded on the markets, e.g., EUR/USD, USD/JPY, EUR/GBP. Each pair signifies two different currencies.

EUR/USD means “Dollars for Euro” and EUR/GBP, likewise, equals “Pounds for Euro”. The rate is what you can buy or sell the pair for 1.3325 BUY means you can buy 1.3325 dollars for each euro, and 1.3315 SELL means you can sell 1.3315 dollars for each euro.

Pip: This word represents the basic unit of profit in Forex so it’s crucial to understand it. A pip is the smallest increment of a pair. For the EUR/USD or any other pair it’s 1/10,000th. The Yen is an exception, where the pip is 1/100th.

Spread: You might have noticed that the BUY/SELL rate wasn’t the same. That is called the “spread“. All Forex markets of any liquidity have a spread of some sort, and oftentimes a broker will widen them slightly to make a profit. This is equivalent to a stock broker charging per-trade. So in order to be profitable, you will need to recoup the spread.

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2. Practice

The second key to Forex trading is practice, practice, practice. Most Forex brokers offer a $50,000 practice account (Demo account). Set one up, and mess around-watch your money evaporate. After you have played around for a couple days, open another practice account, but this time develop or use a specific trading strategy. Pick a method and stick to it. You may or may not make money this time, but you will start to have a fuller understanding of the inner workings of the market. After a few weeks, try another strategy and get good at two or maybe three.

3. Start small

The third key is to start small. This is where most beginning traders lose the most money. After you have practiced for several months, take the strategy you know best and some money you can afford to lose. It is certainly best to chose a broker based on a comparison list or based on reputable reviews. Open a micro account, start really small, use a disciplined method, and begin trading. Know your own psychology and resist the temptation to be driven by greed or fear.

Conclusion: No one borne to be a good Forex trader, all started from zero and learnt to be the good. Sometimes change your habit is not easy but if you want to be one of 1% amount world population, you have to change yourself. This article is experience and advice from professional Forex traders. These are Three steps to become a Forex trader. We hope that it will be useful with you.

What more video:How To Become A Successful Forex Trader

Read more: 5 Steps to trade on Forex for Beginners