Many people consider trading in the foreign exchange market, but are unsure as to whether it is the best option. Prior to entering into any investment, you should consider if it is the right thing to do and forex trading is no different. The foreign exchange market is not suited to everyone. To find out if this is the type of market you would like to enter, you should look at what you want from the market, why you are looking at trading and your personality, as well as your current circumstances.
Why do you Want to Trade Foreign Exchange
The first point you need to look at is why you want to trade foreign exchange. This is very important because you have to go into this with the right intentions. Some people view trading as a means of making money quickly and these people will be disappointed. If you try to make money quickly on the forex markets you are going to lose more than you make.
Trading on this market requires time and patience. If you rush through all the steps of trading you are going to place bad trades which lose you money. If you are looking to make a certain amount of money by a certain date then you are going to increase your risks to a dangerous rate. This often leads to greater losses and the depletion of your trading account.
What do you Hope to Achieve?
If you want a steady income from trading you have to be very patient. Only 10% of traders are thought to be making a consistent and steady income from the market. A lot of traders simply break even when they trade. You should start trading as a part-time trader so you can get into the market while still having a steady income.
Most people want to eventually be making a steady income from trading and turn this into a career. Most people will not be able to do this and if you do it will not be within a year. Successful traders state that you should trade for a year and have consistent profits for 3 months straight before you consider full-time trading.
Relax When the Foreign Exchange Rates are Fluctuating
While most people do not want to think about how their circumstances affect their trading it is important that you do this. You should consider how much money you can spare for trading. While it is possible to open a trading account with as little as $1 will you be making sufficient profits from this. You need to have enough capital to open a mini account with a broker and to buffer your trades.
The money you use should also be money that you can afford to lose. If losing the capital will place you in a financial crisis then you should not use it for trading. The emotions that come with using this money will cause bad trades and you will end up losing more than you make.
You should consider what type of personality you are. If you panic easily and become flustered in stressful situations then trading may not be the best option for you. In this market, foreign exchange rates constantly fluctuate and you need to be able to remain composed when this happens.
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