How to start forex trading in 5 steps

So I have had people asking how to start forex trading; which forex broker to use or which forex strategy I use etc. So, I’m gonna explain how to start forex trading today.

There’s five steps that I think you need to take to start trading.

Step 1 – How to start forex trading

Step number one is to learn how to trade. Do your research before you start actually trading because you don’t want to go in and lose all your money straight away. You don’t want to lose all your money within the first few weeks of trading.

I think the statistics are like ninety percent of all traders lose their money. The priority in trading is learning how to actually trade the markets.

You can do this by back-testing; watching videos on YouTube and going on a website called Baby Pips.

Step 2 – Find a good forex broker

Once you have learnt the markets and how everything works, then you can find a forex broker. When you’re finding a broker, you want to research them again. Make sure you check the reviews and ask other people that trade. You can check what brokers they use and make sure it’s a trustworthy broker. 

Obviously, they must be regulated. This is so that you know that your money is secure with them. They can’t just run away with your money.

Also look for a broker with low spreads because to maximize your profits, you need to pay very little in commissions and spread to the broker. 

Step 3 – First practice using a demo account

Step three is to sign up for a demo account with that broker. A demo account gives you ‘fake money’ that you can use to test your trading strategies and tools. The time you want to spend on demo account trading varies from trader to trader.

For some people, it’s two months, for some it’s six months.

The goal is to make sure you’re profitable on that demo account before you move on to try to trade a live account. This is where you deposit real money with your broker.

Step 4 – Open a live trading account

Step four is to actually open a live account using a good forex broker – like the broker that I use. I’d say deposit a small amount as a start so that you get used to trading the markets. This is also so that you test whether the broker will payout when you have made your trading profits.

A golden rule is to trade with money that you’re willing to lose. Say you’ve only got five hundred pound savings – don’t put all the five hundred into your trading account. Deposit 50 or 100 pounds and try to trade your way up compounding it over time.

Step 5 – Grow your trading account

Step five is to consistently generate profit on your trading account every week. This so that you build up your account over time. The biggest tip in trading is to cut your losses short and let your winners run, because you don’t want to be letting your losers run to an extent where you might actually lose more than you are profiting.

Closing your winning trades early is also a big problem. Don’t close your trades the moment they turn blue, you want to give them a chance to pan out. 

I will say these are my top five tips on how to start forex trading. If I can do it, it’s possible for anyone to learn how to trade forex.