If you like dealing with numbers, you can earn money online through forex trading. It is an exiciting way to make money on the internet.

As a forex trader, you will be buying and selling different foreign currencies for profit. These currencies are usually traded in pairs such as EUR/JPY, EUR/USD and so on. It is not difficult to trade currencies if you understand the fundamentals of the market.

Read Also: How to Trade Forex – A complete Beginners Guide

Basically, what you will be doing is to buy when the market is low and sell when the market is high. Several individuals have made a lot of money by simply trading currencies.

• Find a Reputable Broker
• Use a Practice Account
• Start Small When Going Live
• Treat Trading as a Business
• What you should consider
• Becoming more proficient

Find a Reputable Broker 

The forex industry has much less oversight than other markets, so it is possible to end up doing business with a less-than-reputable forex broker.

Due to concerns about the safety of deposits and the overall integrity of a broker, forex traders should only open an account with a firm that is a member of the National Futures Association (NFA) and is registered with the U.S. Commodity Futures Trading Commission (CFTC) as a futures commission merchant.

Each country outside the United States has its own regulatory body with which legitimate forex brokers should be registered.

Traders should also research each broker’s account offerings, including leverage amounts, commissions and spreads, initial deposits, and account funding and withdrawal policies.

A helpful customer service representative should have the information and will be able to answer any questions regarding the firm’s services and policies.

Use a Practice Account

Nearly all trading platforms come with a practice account, sometimes called a simulated account or demo account, which allow traders to place hypothetical trades without a funded account.

Perhaps the most important benefit of a practice account is that it allows a trader to become adept at order-entry techniques.

Few things are as damaging to a trading account (and a trader’s confidence) as pushing the wrong button when opening or exiting a position. It is not uncommon, for example, for a new trader to accidentally add to a losing position instead of closing the trade.

Multiple errors in order entry can lead to large, unprotected losing trades. Aside from the devastating financial implications, making trading mistakes is incredibly stressful. Practice makes perfect: Experiment with order entries before placing real money on the line.

Start Small When Going Live

Once a trader has done their homework, spent time with a practice account, and has a trading plan in place, it may be time to go live—that is, start trading with real money at stake. No amount of practice trading can exactly simulate real trading. As such, it is vital to start small when going live.

Factors like emotions and slippage (the difference between the expected price of a trade and the price at which the trade is actually executed) cannot be fully understood and accounted for until trading live.

Additionally, a trading plan that performed like a champ in backtesting results or practice trading could, in reality, fail miserably when applied to a live market.

By starting small, a trader can evaluate their trading plan and emotions, and gain more practice in executing precise order entries—without risking the entire trading account in the process.

Treat Trading as a Business

It is essential to treat forex trading as a business and to remember that individual wins and losses don’t matter in the short run.

It is how the trading business performs over time that is important. As such, traders should try to avoid becoming overly emotional about either wins or losses, and treat each as just another day at the office.

As with any business, forex trading incurs expenses, losses, taxes, risk, and uncertainty. Also, just as small businesses rarely become successful overnight, neither do most forex traders.

Planning, setting realistic goals, staying organized, and learning from both successes and failures will help ensure a long, successful career as a forex trader.

What you should consider

Forex trading is an online business that requires a lot of knowledge. It is important to get as much knowledge as you can before you start. It is easy to get the information that you need on the internet without spending any money.

A lot of forex brokers on the internet make available free training material in the form of training videos, articles and eBooks. You can take advantage of these materials to get all the education that you need.

Do not be deceived by people who tell you that you can easily become rich when you earn money online through forex trading. This is not entirely true. People who became rich through speculating on currency values built up their profit over some years.

This business is associated with some risks and you can lose money if you are not careful. Becoming more knowledgeable will help you to reduce your risks. Most traders lose money from time to time but you will always make profit if you win more than you lose.

Lack of education and adequate practice is what makes a lot of individuals to lose money in forex trading. If you want to consistently earn money online through forex trading, you have to get a lot of knowledge about how the system works.

You can use the demo accounts provided by online brokers to get as much practice as you need. Demo accounts are available free of charge and they provide you with a good way to practice real time trading. It is advisable to spend a few months on a demo account before trading with real money.

Becoming more proficient

The most important strategies are technical analysis and fundamental analysis. You will have to get advance training in these strategies. This will greatly increase your ability to make profit on most of your trades.

It is advisable to find an experienced trader who will teach you how to properly apply these strategies to earn money online through forex trading. You can easily find mentors by joining reputable training programs on the internet.

Some online brokers also provide this level of training. If you can afford it, you should pay for one-on-one training with an experienced coach who will teach you all that you need to succeed on the internet with currency trading. You will minimize your losses and win more if you are properly trained.

Read Also: A Comprehensive Guide to Trading Bitcoin

The worldwide forex market is attractive to many traders because of the low account requirements, round-the-clock trading, and access to high amounts of leverage.

When approached as a business, forex trading can be profitable and rewarding, but reaching a level of success is extremely challenging and can take a long time.

Traders can improve their odds by taking steps to avoid losses: doing research, not over-leveraging positions, using sound money management techniques, and approaching forex trading as a business.