Incredibly, we saw 1.8 million adults dabble in the stock and forex markets during the coronavirus pandemic. People were looking to leverage this volatile market in the short term and boost their earning potential. Unsurprisingly, only a few were able to turn a profit. This is indicative of a marketplace in which 70% of retail traders lose money over time. While many newcomers have been inspired by an Instagram influencer forex trader, there are also a number of traders who already operate part-time. However, they want to transition to trade forex full-time. Here are some steps to help you achieve this aim.
Your starting point as an aspiring full-time trader lies within research and learning. It’s crucial that you have a comprehensive understanding of the market. Thus, you must improve your skills as you look to create a viable income stream.
This involves both theoretical and real-time learning. You must understand the rules that govern shifts in the marketplace. Therefore, developing a useful sense of determinism in the process and reacting to live news releases and analysis.
You also need to understand the key factors that impact on the forex market. This includes the macroeconomic climate and factors such as interest rates and inflation.
The latter element is commonly referred to as fundamental market analysis. This focuses on exploring the factors that impact forex market movements in minute detail.
First, there is inflation and interest rates, the latter of which tend to devalue currencies when they crash. However, other prominent factors include economic growth, trade flows, and the basic rules of supply and demand.
This will also involve little technical insight. Instead, you learn how to analyze trends, charts, and relevant time-frames effectively. Thus, learning how to choose viable entry and exit points for your trades.
When you become a full-time trader, it’s important that you review and tighten your core trading strategies. There are a number of forex trading strategies that work, but it is important to find one that fits your trading style and risk tolerance.
On a fundamental level, this involves selecting the right broker with a viable amount of leverage. All before you deploy a so-called “demo account” for between three and six months. This will offer you access to a simulated, real-time marketplace. Here, you can hone your strategies without risking your hard-earned cash.
Your strategies should reflect your risk outlook and profit expectations. Options like scalping require you to leverage volatility to your advantage and pursue incremental but frequent returns each and every day.
If you’re going to trade full-time, you should also use a demo account to experiment with various risk and capital management strategies. In terms of the former, you should definitely try to apply stop losses to your trades. This will automatically close positions once they incur a set level of loss.
As part of the learning and experimentation process, you should also learn how to successfully diversify your trading and forex portfolio. So, while it’s key to start small with one or two major currency pairs (which are typically highly liquid), you should develop a long-term plan to target new pairings and potentially other asset classes in the future.
Experimentation can also help you to avoid the risk of over-diversification. This can eat into and devalue your returns. Thus, impact negatively on your ability to optimize earnings when you trade forex full-time.
