There are really many pages on this topic. But what I’m about to give you are exactly what I personally went through, rather than the information you get through banks or forex brokers. And without further ado:
Number 1: A reputable forex broker
When I first started I had absolutely no idea how I could trade forex. Through a bank? So I went to OCBC, since I had a stock trading account, and enquired about trading forex. It was soooooo complicated I couldn’t even understand it. You had to close positions within 3 days. That didn’t sound like the type of forex trading I heard about.
So I did the simplest thing: I Googled “Singapore’s Top Forex Broker”
It turned out to be OANDA. (Again, disclaimer, I don’t get anything out of promoting OANDA. They just happen to be the first retail forex broker I tried out)
- A retail forex broker acts as a market maker (middle man) to let you buy and sell stuff, be it forex, commodities, ETFs, etc. Think of it as a middle man that allows you to buy and sell stuff
- What makes a good broker? That’s a tricky question. Because as with any business, there will be bad rats, and good, honest businesses. OANDA has proven to be one of those good, if not the best, forex brokers out there. Because dishonest brokers, as with any middle-man type of service, exist.
- Every service provider, such as forex brokers, has its pros and cons. And as a beginner, OANDA provides the best pros you can ever ask for:
- Free trial account with no time limit.
- Tight spreads (basically the difference between the buy and sell price which goes into the broker’s pockets)
- Ability to trade mini/microlots. Basically, forex is usually traded as “lots” of 100,000 units. OANDA allows you to even buy 1 unit of a currency pair. This allows you to make very very small trades, which is great because you need to start small.
- Free MT4 platform account. Now this is probably once you are more advanced into your trading. Because the basic OANDA trading platform is very basic with rather..in my view, a small range of indicators with below average customization. But that’s not to say you MUST have the MT4 platform to trade. But it is more versatile, and has more functions for the advanced trader, and most importantly, ability to add custom indicators that you can buy from real traders. (Buyer beware!)
- I won’t go into the disadvantages here yet. That will be a little beyond the basics.
Number 2: Know how to use the platform
For the more IT saavy, the platform is pretty strightforward to use. There are also tutorials on the website on how to use their platform once you open a free demo account with them.
If you’re not that IT saavy, you can either look up on YouTube for tutorials, meet up with me, get on my email list, and then see my own video tutorials on the very basics of how to use the OANDA platform. How to buy, how to sell, basically all the “need to know” and “all you need to know” stuff. At the very least. You must know the difference between “buy” and “sell” 😛
Number 3: Learn to read candlesticks
Trading is basically an exchange of numbers. And there are many ways of visualizing numbers. My favourite is the candlestick. It is not difficult to learn about how to read candlesticks. But if you really have no clue or find it difficult, I am willing to offer tutorials to teach you one to one. This, definitely will need a fee, because to be a successful trader, one of the basic tenets is self-directed learning. But I understand that some need help. And if you’re wiling to pay, I am willing to teach. It’s that simple. I offer that service on my Facebook Page.
Number 4: A strategy to test on your trial account
I have made videos on simple strategies that you can use directly on the OANDA account. But I believe strongly in self directed learning. Once you are familiar with “playing” with the platform, it’s time to apply a strategy. This is where you need to learn how to add indicators, adjust the indicators, and start reading and understanding price patterns. The simplest trading strategy will be trend trading, which many believe to be the true Holy Grail of trading, just that, it is very difficult to maintain the discipline and emotional control to allow the strategy to work. (This is advanced discussion, we shall leave it for next time.) Here’s a simple strategy you can try out, or, you can get on my email list, and have access to my own tutorials and learn from there and most importantly, try them out yourself.
Finally, number 5: The discipline, emotional control, and commitment to start trading a small live account with tiny position sizes
This goes back to the advantages of OANDA. There is no minimal sum to deposit to start a live account. You can start with $100. And trade super small sizes that make you lose 10 cents or win 10 cents. Now I say this with EXTREME CAUTION. DO NOT DO THIS IF YOU ARE GOING TO USE ALL YOUR $100 TO BET ON A SINGLE PUNT. YOU CAN EASILY LOSE ALL YOUR MONEY OR MORE, IF THE PRICE MOVED TOO FAST THAT YOU NEED TO TOP UP THE LOSS.
Now I’ve explained why I believe this to be one of the most important beginning steps for a beginner trader, as trading fake money is a whole lot different from trading real money, even is it’s dealing with 10 cents, or a dollar. But again, I must emphasize, do not do this just because you made a lucky $1000 profit on your fake money account and immediately want to do the same on the real money account and throw in all your savings to do the same thing.
That’s suicide. You might get lucky, yes, and become an instant millionaire. But chances are, you will try it again. And that’s when you will fall so hard and so fast you’ll be scarred forever and your life may even be ruined.
Trade with real money, small, real money, as soon as you know how to use the platform and have some kind of strategy. Keep records of your trades, train your discipline, focus on the process instead of the P/L, and you will supercharge your learning towards being a Smart, Casual Trader.
I cannot emphasize this enough. Forex trading can kill you. If you don’t know how it works. Understand it first. It’s not difficult to understand the basic concept of “do not throw all your eggs in one basket”. If you can understand that, and can follow all the above 5 steps, you are ready.
Talk to me first. Get in touch. I don’t bite. I drink coffee. And like Yakun kaya toast.
Trade Smart. Trade Casual.