There’s no doubt that technological advancement has altered the landscape of the global forex market, making it increasingly accessible to novice and part-time traders in the process.
This is borne out by rising trading volumes, along with the rising value of the forex market (which appears to increase incrementally with every passing year).
But how can you successfully turn your forex hobby into a business? Here are some steps to help you on your way!
Don’t Overlook the Importance of Practical Market Experience
Every successful forex trader has built their attainment on an underlying knowledge of the market, and the key deterministic factors that govern shifting price movements.
However, such theoretical knowledge means little unless it’s strengthened with corporeal experience of the marketplace, as this enables you to practice regularly and hone your trading strategies carefully over time.
You can achieve this by accessing a demo account through your MT4 web account, which enables you to trade freely in a simulated, real-time marketplace without having to risk your hard-earned capital.
You can use a demo account for six months, during which time you should commit to practicing prolifically and try experimenting with alternative currency pairings.
Organise Your Capital and Mind the Costs
When you start trading for real, it’s crucial that you strive to organise your capital carefully and factor in the underlying cost of executing orders in the forex market.
To begin with, the capital requirement for the forex market remains relatively low, so you’ll need to focus on ensuring that you don’t commit more than you can afford to lose when executing trades. Currencies are also traded on margin and leverage, which means that both losses and gains can be disproportionate to your initial deposit.
You’ll need to keep this in mind and use calculators to estimate potential profit and loss, while ideally utilizing stop-loss measures to automatically close positions once they’ve incurred a predetermined level of loss.
When it comes to cost management, remember to factor in brokerage charges and the variable transactions that may eat into your profits.
Remember that Forex is Now Your Trade!
Making key capital management decisions and optimizing profit is crucial if you’re to succeed as a full-time trader, while this should also be part of a wider shift in your outlook as you begin to view forex trading as a business.
To help create and reinforce this mindset, we’d also recommend creating a detailed and structured business plan, which outlines how much capital you intend to invest and the level of profit that you want to bank during various time frames.
Another key aspect of this mindset is to thoroughly research your target currency pairs while using this information to trigger more informed decision-making.
You should also adopt a similar approach when looking to diversify your interests over time, as you’ll need to research potential markets to ensure that you hedge risk and minimize exposure levels.