Now that you have some background on how Forex works, let's take a look at what you need to get started right now. This list will be much different from the lists you see on blog posts, so be sure to read through this carefully.
- A reputable broker (see our recommended brokers here)
- A trading plan, including a risk management plan
- Self-improvement tools and resources
- A proven trading strategy
You Don't Need Money
You might have noticed that I didn't mention money in the list above. The reason is that in Forex, you can get started with a free demo account and learn with play money.
The most important thing is to develop your skills, and a demo account is the best way to figure out the basics of how to execute trades and start to develop your trading method.
Learning to trade with play money also takes the pressure off, so you are free to learn at your own pace.
So you have no excuse for not getting started in Forex.
Now let's get into more detail on each item that I listed above.
How to Calculate Profit and Loss in Forex
Forex is calculated a little differently than in other markets, but it's easy once you get the hang of it.
The formula is as follows:
(number of pips profit or loss) X (cost per pip)
You can usually get the cost per pip per lot from your broker's website.
A Reputable Broker
First, do is some research and find a reputable broker in your country. There are a lot of scams in any investment arena, so do your homework.
I see way too many people send their hard-earned money to some person that randomly messaged them on Instagram or Telegram. If you decide to do this, you can kiss your money goodbye.
So don't just jump at any offer that comes your way, take your time to find a good company. I'll get into more detail on how to find the best broker later in this course.
A Proven Trading Strategy
An important thing to remember about trading strategies is that they are very individualized. What works for someone on YouTube probably won't work for you.
That's the reality of trading.
The most successful traders piece together parts of other trading strategies and create something that works for them.
With that in mind, remember that you have to prove that a trading strategy works for you. It doesn't matter how successful another trader is with a strategy.
You have to test the strategy and be comfortable with it.
I'll give you some tips on how to find a strategy later in this course.
A Trading Plan
After you find a strategy you like, you'll need a write down your trading plan. You can get started with a downloadable trading plan worksheet here.
Again, I'll get into more detail on how to create a complete trading plan, in later lessons.
Self-Improvement Tools and Resources
This is the most important item on the list.
Do the work on yourself.
I'll say that again because it really is that important. Focus on improving yourself every day.
Working on yourself will help you in trading, but it will also have payoffs that go way beyond trading.
There are a ton of effective modalities and programs out there, which are beyond the scope of this course. But start with something that you will will help, and go from there.
For a list of what I've tried, read this.
Things to Avoid in Forex
Equally important is to know what to avoid. So here's a short list of what to be aware of.
- If it seems too good to be true, it usually is
- Always research a person or company before sending your money
- People who contact you randomly on social media are usually a scam
- Depending on others to trade for you will usually lead to disappointment. Learn to develop your own skills.
Now that you understand the basics what you'll need to get started, let's move on…