The forex market is one of the biggest entities of its type in the world, with an estimated $6.6 trillion traded globally every single day.
While the trading volumes and liquidity associated with forex trading may be attractive to aspiring entrepreneurs, this market is also inherently volatile and can cause you to lose far more than your initial deposit.
With this in mind, you’ll need to ensure that you’re fully equipped before launching a trading career, and here are a few of the key considerations to keep in mind.
1#) Learn and Master Your Trade
Knowledge is one of the key weapons in any successful trader’s armoury, but your ability to apply this practically is arguably an even more important consideration.
This is why aspiring traders must take time to learn and master their trade, while seeking out viable ways of bridging the gap between theoretical knowledge and practical experience.
This is where mobile trading apps such as the MetaTrader 4 are worth their weight in gold, as they connect you to a simulated and real-time market environment through a so-called demo account. By using this, you can hone your strategies without risking your hard-earned capital, providing crucial lessons and insights into your future activity.
2#) Organise Your Trading Capital and Establish Manageable Goals
Forex trades are margin-based, which enables investors to use leverage to their advantage and open up positions that are far larger than their deposit amount.
However, we’d recommend organising your capital and starting with more than your initial deposits, as having a larger sum of cash in the bank creates a crucial buffer than can help to offset any initial losses.
It’s also important to conceive and establish manageable objectives, in line with your risk profile, existing level of capital and the way in which you choose to trade the market.
You can also utilise key trading platform tools to help achieve such goals, with so-called stop loss measures enabling you to automatically close positions once they’ve incurred a predetermined level of loss.
3#) Establish a Legal Business Entity
Forex trading is also attractive as earnings aren’t subject to capital gains tax, but despite this, you’ll still need to establish a legal business entity that operates lawfully.
A key aspect of this is choosing the right location, as while the foreign exchange may be a global market that operates across three geographical regions, some destinations are home to particularly lucrative niches.
For example, Asia is home to three of the top five forex trading centres in the world, with Singapore, Hong Kong and Japan now accounting for 19.7% of the overall marketplace.
By choosing the right location and ensuring that your business is regulated by the necessary authority, you can safeguard your venture and any profits that you make in the future.