It has become increasingly popular for individuals to trade forex from home as sole traders since the internet developed with fast connections. The forex market is the largest market in the world and boasts a massive 3 trillion dollars traded every day and is well known for its volatility in the currency pairs. It is important to gain some knowledge of this market if you intend to place your own trades or you can pay a professional trader to make the investments for you, in this particular article I am going to concentrate on the cost of setting yourself up as a sole trader.
It is a misconception that you need thousands of dollars or pounds to invest in the forex market. It is also not necessary to use leverage on your investments this is especially dangerous. There are plenty of spread betting platforms that now let you trade at as little as 0.10p a point so starting with as little as £100 is more than adequate. Depending on how much you wish to make each day will depend on how much you wish to trade per pip and the size of your initial investment. There are certain guidelines by which traders gauge their investment and they are not to invest anymore than 5% of their trading balance on any one trade.
The risk management guidelines, or the 5% rule as I call it, are a simple mathematical equation to stop you from depleting your balance before you have had a chance to reap the rewards of your trading system. An example of this would be; a £1000 initial investment with a trade set with a 25 pip stop loss, at £2 a pip would be risking £50 of your trading balance or 5%. If your trading system has an 85% success rate then that means you will win 85 out of 100 trades which is a good success rate. However if you lose your first 15 trades and invested over 5% you would deplete your balance before you made any profit that is why this rule stands in place.
There is enough free information on the internet to self teach about the forex market and how to trade it. To learn this way may take some time and tests with a demo account would need to be carried out in order to create your own 80% success rate system. You can pay a lot of money to learn how to trade if you want to speed up this process but then there is no guarantee that you will not deviate from what you have learnt. One of the revolutions to bring cost down in the past 5 years and an excellent place to start is forex clubs.
One of the best ways to start trading straight away is a forex club, these clubs are a group of traders trading together often over a webinar. The forex clubs are coordinated by a professional trader that will show where he is entering and exiting trades and the reasons why. Although for legal reasons the professional can’t tell you to enter or exit a trade it is up to your own initiative to copy what he is doing to profit. This gives a way for beginners to start trading straight away with just the knowledge on how to use their spread betting platforms.