Trading in the forex market is an exciting prospect and once you discover its benefits, it is tempting to jump in as early as possible head first and seek out those high profits for minimal work.

However, you should understand that as profitable as the currency trading market is, it has also made a number of people bankrupt.

Therefore, rather than jump in head first as your instincts drive you to the fast gains, you should dip a foot first then gradually immerse yourself.

There are a few things you really MUST do before you get into currency trading online in the FX market in order to ensure your long term profitability.

Do not worry, the market isn’t going anywhere and opportunities for profit exist every single minute and that will always be the case.

1. Education

In the forex market, you cannot rely on luck like when gambling at a casino. You need to deal in facts and market forces as they occur.

Therefore, you need to acquire an education about how the currency trading market works. You need to know the economic factors that have an impact on currency prices.

You need to know how to generate forex trade signals and how to interpret and apply them. Without this basic knowledge, you will simply be placing bets going with your gut, and that is not trading, it is gambling.

A forex education will enable you to know how to create a forex trading strategy that will work for you.

It will give you the ability to accurately read and interpret price charts and trade signals and these form the basis for any trade.

A good education will help you determine the best trade entry and exit points for your continued profitability. This site, www.forextradingbig.com, is equipped with lots of resources to enable you succeed as a currency trader.

2. Seek a Mentor

Learning about the forex market can seem overwhelming when you are new to it.

It is much easier to fast track this learning process if you have a knowledgeable, trustworthy, and reliable forex professional to guide you.

A mentor will help you quickly grasp the basics of currency trading and enable you to quickly advance in your education.

A mentor will advice you on the most profitable currency pairs, the most effective trading strategies for your chosen currency pair depending on your individual trading style, and a mentor will also help you pick out the best money makers or brokers thus helping you avoid frauds and scammers.

3. Get Funds

To make money, you need to invest money. It is not advisable to use money you have set aside for other urgent or important functions for trading in the FX market.

Do not use money set aside for your primary needs such as your food money, college fees, house rent/lease, or mortgage payments.

If you do not have some money set aside for investments, start saving or liquidate assets that you no longer need.

Remember, just like most other business investments, the amount of returns or profits you make are directly proportional to your level of investment. If you put in very little, expect very little returns.

But if you invest more time, money, effort, and knowledge in your forex trading endeavors you stand to gain a far much higher rate of return.

4. Find a Broker

As a forex trader, you have to buy and sell your currency. The best way to do this is through a broker.

The internet is full of brokerage firms from all over the world with varied types of services, many different trading platforms, and greatly varying levels of expertise.

Then of course, like all e-commerce ventures there are those out to fleece you and disappear with your money. Finding the right broker for you is a very important factor that will greatly determine whether you become a successful trader or not.

You need a broker who will first and foremost protect your capital investment. The broker should also offer a fast and reliable trading platform that has all the features to help with your market analysis.

The trading platform should be able to reliably run on your primary trading device, whether it is a PC or mobile device.

Your broker should have a good customer support system to guide you in case any issues come up.

Click here to get a honest, helpful, and reliable opinion of some of the best brokers in the forex market.

5. Practice, Practice, Practice

This is one of the most important things you should do all the time, even after you have become a full-time proficient trader.

Your learning never stops and you have to test all new knowledge to see how it performs when integrated into your trading strategy.

Open a demo account once you have learnt the basics, long before you put any real money into your forex account.

Use the practice account to learn all aspects of currency trading online, to develop a trading strategy, and to familiarize yourself with the market and the trading platform.

Test out the broker’s trading tools and customer support systems for accuracy and reliability.

6. Define Your Strategy

To be profitable in the FX market, you have to treat your forex account as a business investment.

Do not binge-trade or impulse-trade. You need a working strategy that clearly stipulates the market conditions that are necessary for you to enter a trade.

Your strategy should pinpoint factors which determine your trade entry and exit points and the trade management tools you will use for each trade.

The strategy should have risk management tools to enable you easily move on after losses and capitalize on your profit-making trades.

7. Open a Forex Trading Journal

The need for records can never be over-emphasized. Start early on with your demo account and learn how to best record your trades.

Be as detailed as possible on each and every trade and include reasons for each action you make.

Regularly review your past trades and historical data to help you analyze your overall trading strategy.

Click here to read more on how to open a trading journal.

8. Compliance

When you are finally ready to start trading in your live account, make sure you keep everything legal. Comply with your country’s laws regarding trade.

Check and consult more about your taxation laws to avoid future problems and to take advantage of any tax benefits available to forex traders.

Comply with banking rules and regulations that relate to international money transfers, especially when using brokers based or registered outside your country.

There are gains that can be made by some illegal practices such as tax evasion, but these are clearly not worth the trouble of having to face litigation and prosecution.

Summary

When you eventually enter the forex market, make sure you have followed the above steps first.

Since you are a beginner, no matter how much experience you have had on a demo account just start small and as you become better experienced and more profitable, gradually increase your investment.

This is because as humans, we get more emotionally attached to our trades when there is real money at stake.

A demo account will not adequately prepare you and that is why you need to start small.

Photo credit:  dmachiavello