I think it should go without saying that to venture into any kind of business or investment, the first thing one should do is get an education on the subject.

If anyone says any different then the loony bin still has space for more. The forex market is a vast maze where investments can get lost in the blink of an eye. Fortunately, they can multiply in size just as fast.

To benefit from this kind of growth, there are a few steps you should go through when getting started on currency trading online.

1.     Know The Market

As I said, education is the key. Research everything you can about the market. Learn the ins and outs of the market.

The best way to do this is to enroll in a forex trading course for beginners and work your way through to higher levels.

There are many online tutorials for new traders and some of them are offered free of charge so you really have no excuse barging into the market with wide-eyed ignorance. For example, this site, www.forextradingbig.com, has tons of helpful resources to teach you how to trade forex profitably.

Follow online forums and register yourself in a few that are specifically aimed at helping newbies.

Follow a few blogs run by forex experts who have been in the trade for a while and learn from their experiences.

2.     Equip Yourself

As you educate yourself, start preparing for your eventual entry into the currency trading market.

Since you will be trading online, the most obvious thing you should have is a computer or other internet-enabled device. This is your investment you are talking of so go out and get a fast and efficient machine.

While you are at it, get yourself a subscription to a fast, reliable internet service.

The fate of your investments heavily relies on how fast you can get accurate market information and how fast you can react to it. Buy a good printer too. You will occasionally need to make some paper print-outs.

3.     Find A Broker

Undoubtedly, this is the step that requires all of your research skills and an unwavering dedication and focus.

If you don’t want to be one of those sob stories we hear all the time about newbies who fell victim to scam brokers, then you had better take your time on this and conduct due diligence.

Your choice of broker is what will make or break your forex investment dreams. Choose one with a good track record. Choose one who has been in the business for a long period.

Click here to read some other criteria for choosing the best broker.

The best way to sort out the good from the bad and the ugly is to rely on recommendations from people you trust and who have been trading forex online for a number of years.

Click here to read a review of some of the best brokers in the market.

4.     Practice On A Demo Account

Practice makes perfect and in currency exchange this is a necessary phase in your trading life. Once you have chosen a broker, open a demo or practice account using the broker’s trade platform.

Trade regularly on your demo account to become familiar with all concepts regarding currency trading online. Get familiar with your broker’s online trading platform and all its features.

Do not switch from this demo account to a live account unless you have been trading profitably on the demo account for at least 3 months. Learn how to use the real time data and price charts on your demo account.

5.     Develop A System

One thing you should accept early in your trading life is that you will suffer losses occasionally.

Your best way to being profitable on a long term basis is to manage your losses, multiply your profits, and safeguard your forex investment capital.

To do this you require a forex trading strategy or plan and you need to stick to it.

Use the period you will be on the demo account to develop a profitable, practical, and workable forex trading strategy that will guide all your trade actions in future.

Feel free to experiment with many different ideas while on the demo account until you find a system that works for you.

6.     Deposit Your Trading Capital

Once you have learned to trade profitably on your demo account, it is now time to invest your real money.

Your broker may have some contracts for you to sign and terms and conditions to review. Take your time and read it all, including the fine print.

Do not hesitate to ask where any part is not clear. Signing such an agreement will bind you for your whole trading career, or at least until you close your account with the broker.

Most brokers will have options for opening a micro account, a mini account, or a standard account.

A micro account may require a deposit of between $200 and $500. There are forex micro accounts that may be opened for even as little as $20 but I personally wouldn’t recommend those.

This is because you may not treat such a small amount as a serious investment and will be likely to trade recklessly and lose it very fast.

A mini account may require a deposit of between $1,000 and $50,000. A standard account will require deposits in multiples of $100,000, which is the price of a standard lot.

7.     Start Live Trading

You have your education, your perfect broker, your deposited investment, and a working strategy.

It’s now time to earn real money. Do not treat this as a gambling table at a casino.

This is a business venture which has the potential for providing you with a regular income and even a luxurious lifestyle depending on how seriously you take it and how well you run it.

8.     Start Small

Despite all those hours practicing on the demo account, believe me when I tell you there will be things you will not be fully prepared for when it comes to trading the live account.

The biggest loss-maker for newbies is succumbing to emotion. When your hard-earned real cash is at stake, you will very likely be emotionally tied to all your initial trades and this may cripple you at first.

Start small so that you get time to condition yourself to separate your emotions from your trades.

Additionally, the live account has slightly more features than the demo account and you need time to better acquaint yourself with them.

9.     Exercise Caution

Of course in your education you learned about trading on margin and leverage and how you can invest two hundred bucks and become a millionaire in a fortnight.

While in theory all that is true, it rarely works out that way in real life. Do not be in a hurry to trade on margin as this may spell your quick forex trading death.

Do not overtrade, trade many currency pairs at once, or hold too many forex positions at the same time.

10.  Expand Gradually

While it is advisable to start small and to exercise caution, business investments are for risk takers not for wussies.

I am not saying you should start being reckless in your trades but you should envision your growth even before you start trading.

And to realize these growth visions, you need to gradually increase your trade amounts and market participation.

A good rule of thumb is that if you are uncomfortable, then you are not yet ready for it. Only increase your trade amounts when your trading strategy says it is the right time to pursue such growth.

Photo credit: ForexLearning