How to Become a Successful Self Made Forex Trader

To really be successful at ic markets discount, you need to have it at the back of your mind that Forex will definitely pay you well if you'll only work hard with patience and consistency. The market may already be saturated with traders, but there is always room at the top if you're willing to pay the price.

Forex is the largest market on earth, with a trade volume of over $4.5 trillion. That is a huge amount of money, but it's more or less expected when you consider that most currencies, if not all, are traded in the Forex market. People from different locations around the globe take part in it, and it has been in existence since the days of trade-by-batter, when it wasn't known as Forex.

However, so much has changed since the inception of Forex. In the past, Forex trading was as simple as using gold and silver as a method of international payment (which were usually affected by global supply and demand). These days, prospective traders with the view of a successful Forex career will have to be more specific and familiar with the modern strategies of the Forex market.

Here are questions you must ask yourself if you want to be a successful Forex trader.

1. HAVE YOU MADE UP YOUR MIND?

Before you even register with a Forex broker to trade Forex, you need to make up your mind to do what it takes to be a successful trader; otherwise you'll just while away your time and eventually quit. You may think that your drive at the moment will see you through Forex ups and downs, but successful and experienced Forex traders beg to differ - human psychology is a major Forex demon.

It is an established fact that human psychology, if not controlled, can ruin a trader.

If you're not able to control you psychology, that means you allow your emotions to come into play all the time, controlling how you approach a trade. If trades are going well, emotions are high; you're happy, and willing to continue trading. If trades are not going well, you feel bad, and unwilling to continue.

On the other hand, if you learn to control your emotions and not allow them to come in the way of trade, then you can leverage your psychology in trading. You know that there are bad times, but you also know that they will pass with time.

If you do not have a strong determination to make it big as a Forex trader, it is only a matter of time before you throw in the towel. Every successful trader out there fought the battle of the Forex market, and so should you.

2. WHAT DO YOU KNOW ABOUT THE Forex MARKET?

Just like education is important in life, it is also important in Forex trading. You most likely do not need a degree to be able to trade Forex, but you have to study the proven tactics of Forex to help you trade better.

For you to get it right as a Forex trader, you must understand the following

1. Terminologies used in Forex trading

2. The different strategies applicable and when they can be applied for maximum benefits.

3. Forex time zone

4. Forex brokers

5. Trading platforms and software

6. Forex news

7. Trading tools

A good knowledge of all these and more will put you in a better position to trade the market profitably, even as a newbie.

It is important to note that studying the Forex market is a continuous process so long as you're a Forex trader. That is the only way you can keep up with the indisputable changes that take place in the market.

3. WHO WILL BE YOUR Forex BROKER?

While you're researching on what there is to know about the Forex market, take some time out to do quality research on how and where to find a reliable Forex broker. Having a good broker goes a long way to determine if your trades will be successful or not.

To find the right broker for you, you have to first of all select a number of reliable brokers with good reputation based on your regional regulatory compliance. Beware of brokers that are not regulated by authority bodies; they tend to operate carelessly, and they cannot be questioned by anyone; unlike the regulated ones monitored by the regulatory bodies.

Go ahead to narrow your selection down to find out what broker can meet your specific needs as a Forex trader. Most brokers will allow their prospective clients to test their services with a demo trading platform before deciding whether to register with them or not. You're allowed to experiment with as many trading platforms as possible to help you choose the best broker to work with.

Also take note of the packages offered by the broker and go for the one that best suits you. Be sure to consider the initial deposit, spreads and commissions, leverage and margin, etc.

Never register with a broker on the account of a positive review or reference. There are different kind of brokers and traders, and it is your responsibility to carry out researches to find one that best suits your style as a Forex trader.

4. IS DEMO TRADING REALLY NECESSARY?

A demo account is a "pretend" Forex trading account. It has almost everything you can find in a real Forex account, except that it is not real. It is a simulated platform where traders, old and new alike, can trade Forex for free.

With a demo account, you can

- Trade with simulated money

- Test a broker's services

- Get familiar with a particular trading platform

- Gain notable experience about the Forex market

- Develop a Forex strategy suitable to your trading methods

- Learn to control your emotions while you trade

So, you see. Demo trading is really necessary.

5. WHAT TRADING STRATEGY SHOULD I CHOOSE?

As a new Forex trader, you'll be amazed to find out there's a huge volume of strategies for Forex trading. There are so many of them that it is confusing and stressful trying to find the right one to trade with. A lot of them are not simple enough for new traders, and should be avoided. It is always better to start with the simplest ones and then add to it as you progress in knowledge and experience of the trade.

Understand that you don't need to develop a trading strategy yourself, especially if you're new. Choose from a number of strategies designed by professional traders to benefit newbie Forex traders.

Note that it is at your own risk to trade with any strategy; and a strategy that worked gloriously well for mister A may be a disaster for you if you trade with it. To avoid this, be sure to test any strategy on a demo account to see if it's a good fit.

CONCLUSION:

There is no need to hurry; the Forex market is always open to traders from all over the world. To this note, it is best to take your time and approach Forex trading with caution at every step of the way. Failure is inevitable, but if you've really made up your mind to trade Forex, no failure will be enough to deter you.

If you fail, dust yourself up and try again. Do not stick to a particular strategy if it's not working well for you. The same applies to brokers and trading platforms; change them if they're not a good fit for you. Learn something new about Forex trading every day, practice what you've learnt, with steadfastness, and success will find you.

What are Your Options Regarding Forex Options Brokers?

Forex option brokers can generally be divided into two separate categories: forex brokers who offer online forex option trading platforms and forex brokers who only broker forex option trading via telephone trades placed through a dealing/brokerage desk. A few forex option brokers offer both online forex option trading as well a dealing/brokerage desk for investors who prefer to place orders through a live forex option broker.

The trading account minimums required by different forex option brokers vary from a few thousand dollars to over fifty thousand dollars. Also, forex option brokers may require investors to trade forex options contracts having minimum notional values (contract sizes) up to $500,000. Last, but not least, certain types of forex option contracts can be entered into and exited at any time while other types of forex option contracts lock you in until expiration or settlement. Depending on the type of forex option contract you enter into, you might get stuck the wrong way with an option contract that you can not trade out of. Before trading, investors should inquire with their forex option brokers about initial trading account minimums, required contract size minimums and contract liquidity.

There are a number of different forex option trading products offered to investors by forex option brokers. We believe it is extremely important for investors to understand the distinctly different risk characteristics of each of the forex option trading products mentioned below that are offered by firms that broker forex options.

Plain Vanilla Forex Options Broker - Plain vanilla options generally refer to standard put and call option contracts traded through an exchange (however, in the case of forex option trading, plain vanilla options would refer to the standard, generic option contracts that are traded through an over-the-counter (OTC) forex dealer or clearinghouse). In simplest terms, vanilla forex options would be defined as the buying or selling of a standard forex call option contract or forex put option contract.

There are only a few forex option broker/dealers who offer plain vanilla forex options online with real-time streaming quotes 24 hours a day. Most forex option brokers and banks only broker forex options via telephone. Vanilla forex options for major currencies have good liquidity and you can easily enter the market long or short, or exit the market any time day or night.

Vanilla forex option contracts can be used in combination with each other and/or with spot forex contracts to form a basic strategy such as writing a covered call, or much more complex forex trading strategies such as butterflies, strangles, ratio spreads, synthetics, etc. Also, plain vanilla options are often the basis of forex option trading strategies known as exotic options.

Exotic Forex Options Broker - First, it is important to note that there a couple of different forex definitions for "exotic" and we don't want anyone getting confused. The first definition of a forex "exotic" refers to any individual currency that is less broadly traded than the major currencies. The second forex definition for "exotic" is the one we refer to on this website - a forex option contract (trading strategy) that is a derivative of a standard vanilla forex option contract.

To understand what makes an exotic forex option "exotic," you must first understand what makes a forex option "non-vanilla." Plain vanilla forex options have a definitive expiration structure, payout structure and payout amount. Exotic forex option contracts may have a change in one or all of the above features of a vanilla forex option. It is important to note that exotic options, since they are often tailored to a specific's investor's needs by an exotic forex options broker, are generally not very liquid, if at all.

Exotic forex options are generally traded by commercial and institutional investors rather than retail forex traders, so we won't spend too much time covering exotic forex options brokers. Examples of exotic forex options would include Asian options (average price options or "APO's"), barrier options (payout depends on whether or not the underlying reaches a certain price level or not), baskets (payout depends on more than one currency or a "basket" of currencies), binary options (the payout is cash-or-nothing if underlying does not reach strike price), lookback options (payout is based on maximum or minimum price reached during life of the contract), compound options (options on options with multiple strikes and exercise dates), spread options, chooser options, packages and so on. Exotic options can be tailored to a specific trader's needs, therefore, exotic options contract types change and evolve over time to suit those ever-changing needs.

Since exotic forex options contracts are usually specifically tailored to an individual investor, most of the exotic options business in transacted over the telephone through forex option brokers. There are, however, a handful of forex option brokers who offer "if touched" forex options or "single payment" forex options contracts online whereby an investor can specify an amount he or she is willing to risk in exchange for a specified payout amount if the underlying price reaches a certain strike price (price level). These transactions offered by legitimate online forex brokers can be considered a type of "exotic" option. However, we have noticed that the premiums charged for these types of contracts can be higher than plain vanilla option contracts with similar strike prices and you can not sell out of the option position once you have purchased this type of option - you can only attempt to offset the position with a separate risk management strategy. As a trade-off for getting to choose the dollar amount you want to risk and the payout you wish to receive, you pay a premium and sacrifice liquidity. We would encourage investors to compare premiums before investing in these kinds of options and also make sure the brokerage firm is reputable.

Again, it is fairly easy and liquid to enter into an exotic forex option contract but it is important to note that depending on the type of exotic option contract, there may be little to no liquidity at all if you wanted to exit the position.

Firms Offering Forex Option "Betting" - A number of new firms have popped up over the last year offering forex "betting." Though some may be legitimate, a number of these firms are either off-shore entities or located in some other remote location. We generally do not consider these to be forex brokerage firms. Many do not appear to be regulated by any government agency and we strongly suggest investors perform due diligence before investing with any forex betting firms. Invest at your own risk with these firms.