How to Become a Forex Broker

If you want to become a Forex trader you need to have both patience and some money to get started. Even though it’s easy to start trading on the Forex market, you still have to go through a couple of steps, especially if you want to keep trading for a while and not lose your money immediately.

Trading Capital

In order to get started with Forex you don’t need a huge amount of capital, especially since you can trade on the margin. The minimum amount needed by the average broker is $300 or more and that will be enough to open your account and to begin to trade. Ideally though, the minimum amount should be $1000, though $2000 would be even better for a mini account. While it’s quite a bit of difference between $300 and $2000, this kind of sum would allow you to have a buffer in case losses appear.

Demo Accounts

The demo account allows you to test the waters when it comes to Forex trading. You’re basically using play money in an environment which is connected to the real conditions on the market. You can place the trades in real time and you can see what would happen if you made that investment with real money. While you’re not making a real profit, you can test your Forex skills and if you’re making profits with the demo account, you can think about investing real money. If you’re doing badly with the demo account, then starting to invest real money is certainly not indicated. While a demo account gives you an idea on how the trading will go, it’s also less pressure, so you’re probably going to take different decisions than if you used real money. Just because you were successful with a demo account doesn’t mean that you should be cocky and spend your money without thinking.

Forex Practice

While practicing with Forex trades is indicated, you should also look for tips from Forex books and Forex trainers. While you will create your own style in time, as you accumulate experience, at first you should have a professional to help you and to guide you in the right direction. When you’re a beginner Forex can be incredibly difficult, so a guide to this world is necessary.

Be Profitable

You should try to do trades on paper and use demo accounts, to get used with the Forex market and how it operates. Only when you’re profitable all the time, you can start to think about trading real money on the Forex market. You should try it in the long run without spending real money. If you have weeks or months of profitable transactions then you can think about spending thousands of dollars for a real trade. While in the short run you can get lucky, trading in the long run will tell you if you know enough about the Forex market and you have the experience to make money on it.

Start Trading

Once you have a little practice under your belt and you have an idea on how trades should be done, you can think about trading. While it’s not the same as using demo accounts, if you’ve followed the steps outlined in this article you should have a decent chance at making a profit. Try to do the same things you’ve done during your demo practice and you should be fine.

Daytrader or investor

The type of trader you are will dictate what kind of goals and strategies you should use. As an investor you want stability in the long run, while as a daytrader you want quick profits. As an investor the plan for risk management should be tight and you should know what the bigger picture is when it comes to the currencies you trade in.

As a daytrader you want to guess what are the fluctuations of the currency on a daily basis, so you’re less interested in the bigger picture. You want to guess what the exchange rate will be hours from now, not in a couple of months.

Whatever type of strategy you want to use, the main thing to keep in mind is that you need to be comfortable using it. Use demo accounts to test strategies and see which one brings you the best results.