Forex trading, also known as foreign exchange trading, is the buying and selling of currencies on the foreign exchange market. With an average daily trading volume of over $5 trillion, forex trading is one of the largest financial markets in the world. Trading in forex can be lucrative if done correctly, but it is not easy to become a pro trader overnight. In this blog post, we will cover what is required to move from an amateur to a professional trader pro in forex trading.
Requirements for becoming a pro in Forex trading
1. Knowledge: A successful trader needs to have a thorough understanding of the forex market. This includes knowledge of economic indicators, market trends, trading psychology, and risk management strategies.
2. Trading Plan: A professional trader must have a well-defined trading plan, which outlines their goals, trading strategies, and risk management rules.
3. Discipline: Trading in forex requires discipline and patience. Professional traders must have the discipline to stick to their trading plan, manage their emotions, and avoid impulsive trading decisions.
4. Capital: A professional trader must have sufficient capital to cover their trading expenses and be able to handle market volatility.
5. Technology: A professional trader needs access to reliable and fast trading platforms, charting tools, and news sources.
Where to Start
1. Learn the basics: Start by learning the basics of forex trading. There are many online resources and courses available that cover the fundamentals of forex trading, including the terminology, trading strategies, and risk management.
2. Demo trading: Once you have learned the basics, start practicing with a demo trading account. Most forex brokers offer demo trading accounts that allow traders to practice trading with virtual money without risking any real capital.
3. Create a trading plan: Create a well-defined trading plan that includes your trading goals, strategies, and risk management rules. Stick to your trading plan, and adjust it as needed based on your experience and market conditions.
4. Manage your risk: Risk management is crucial in forex trading. Determine how much capital you are willing to risk on each trade, and set stop-loss orders to limit your losses.
5. Monitor the markets: Keep track of economic indicators and market news that could affect the currency markets. Stay informed about the latest market trends and adjust your trading plan accordingly.
Platforms to Register with
There are many forex brokers that offer trading platforms to their clients. Some of the popular forex trading platforms include:
1. MetaTrader 4 (MT4): MT4 is a widely used forex trading platform that offers advanced charting tools, technical analysis indicators, and automated trading strategies.
2. MetaTrader 5 (MT5): MT5 is an updated version of MT4 that offers additional features, including a multi-asset trading platform and improved algorithmic trading capabilities.
3. cTrader: cTrader is a popular forex trading platform that offers advanced charting tools, technical analysis indicators, and a user-friendly interface.
4. NinjaTrader: NinjaTrader is a trading platform that offers advanced charting tools, technical analysis indicators, and automated trading strategies.
Forex Trading Terminology
Here are some of the most common forex trading terms
1. Base Currency: This is the first currency in a currency pair. It is the currency you are buying or selling in exchange for the quote currency.
2. Quote Currency: This is the second currency in a currency pair. It represents the value of the base currency in terms of the quote currency.
3. Bid Price: This is the price at which the market is willing to buy the base currency. It is always lower than the ask price.
4. Ask Price: This is the price at which the market is willing to sell the base currency. It is always higher than the bid price.
5. Spread: This is the difference between the bid and ask price. It represents the cost of trading and is usually measured in pips.