How to start forex trade business

How to Start Trading: Trading as a Business.

The idea of trading for a living – or having your own trading business – is appealing to many people: You get to be your own boss, set your own schedule and work from home while enjoying virtually unlimited income potential. In addition to these factors, anyone with a computer, Internet connection and a small trading account can give it a try. Unlike many other jobs, no degrees, special training or experience is required.

Steep Learning Curve.

Because trading is so easy to get into, new traders may not realize there's a very steep learning curve involved: Being successful is difficult and takes a lot of time and effort. Here are some quick facts about trading:

About 90% of day traders fail within the first year. There is no way to completely eliminate risk in trading. There is no trading system that wins 100% of the time. You will always have losing trades, even if you are a rock star trader. You need money to make money – it will take a long time to get rich with a small trading account. Successful independent traders can earn a comfortable income, but most do not become millionaires.

The ease with which you can start trading (just open a trading account and hit the “buy” button) in no way implies that becoming a successful and profitable trader is easy. Many of the 90% of traders who fail within the first year do so because they start trading without having developed any type of logical business or trading plan. Any business entered into with such a lack of planning is likely to fail. Another common reason for failure is that the trader is undercapitalized; meaning, he or she doesn't have enough money to take on the risk and absorb the inevitable losses.

No Easy Button.

There is also a lot of deception associated with learning the business of trading. Late-night infomercials and hundreds of websites would have you believe that trading is easy and that anyone can generate a huge and consistent income from the financial markets, with little or no effort. While there may be the rare case where a trader manages to make a huge amount of money in a short time, that's not the norm. For most people, trading involves a lot of hard work before becoming successful.

You might ask yourself:

Am I driven to succeed? How do I handle losing? Do I have time to dedicate to learning the business of trading? Can I stick to a plan? Do I have my family’s support? Do I have money that I can afford to lose? How do I deal with stress? Do I have realistic expectations?

If you want to become a part-time or full-time trader, it's important that you take the time to research and plan your trading business; these are essential steps in your overall success as a trader. This is not a profession at which you will become skilled overnight. Traders who start putting their money in the market too soon or without a well-researched trading plan often find themselves back at the beginning, but with a lot less trading capital. Traders who have realistic expectations and who treat trading as a business – not as a hobby or a get-rich-quick scheme – are more likely to beat the odds and become part of the group of traders who succeed.

Forex Tutorial: How To Trade & Open A Forex Account.

So, you think you are ready to trade? Make sure you read this section to learn how you can go about setting up a forex account so that you can start trading currencies. We'll also mention other factors that you should be aware of before you take this step. We will then discuss how to trade forex and the different types of orders that can be placed.

Trading forex is similar to the equity market because individuals interested in trading need to open up a trading account. Like the equity market, each forex account and the services it provides differ, so it is important that you find the right one. Below we will talk about some of the factors that should be considered when selecting a forex account.

Leverage is basically the ability to control large amounts of capital, using very little of your own capital; the higher the leverage, the higher the level of risk. The amount of leverage on an account differs depending on the account itself, but most use a factor of at least 50:1, with some being as high as 250:1. A leverage factor of 50:1 means that for every dollar you have in your account you control up to $50. For example, if a trader has $1,000 in his or her account, the broker will lend that person $50,000 to trade in the market. This leverage also makes your margin, or the amount you have to have in the account to trade a certain amount, very low. In equities, margin is usually at least 50%, while the leverage of 50:1 is equivalent to 2%.

Another major benefit of forex accounts is that trading within them is done on a commission-free basis. This is unlike equity accounts, in which you pay the broker a fee for each trade. The reason for this is that you are dealing directly with market makers and do not have to go through other parties like brokers.

A trader looking to open a new position will likely use either a market order or a limit order. The incorporation of these order types remains the same as when they are used in the equity markets. A market order gives a forex trader the ability to obtain the currency at whatever exchange rate it is currently trading at in the market, while a limit order allows the trader to specify a certain entry price. (For a brief refresher of these orders, see The Basics of Order Entry .)

Starting Your Own Forex Brokerage? 3 Things to Consider.

The Dot-com boom has brought us accessible information, opportunities to voice opinions and a channel to create aspiring online businesses with a global audience. Among the businesses that have boomed as a result of the Internet and globalization are Forex brokers.

A forex brokerage is an entity that connects retail forex traders (i. e. individuals that trade on the foreign exchange market) with the forex market. The forex market is traded on the “interbank” which is a fancy way of saying banks trade electronically with each other at various prices that vary from bank to bank.

The growth of forex brokerages can be attributed to the fact that, now more than ever; people wish to make money from home rather than going to work and putting money into someone else’s pocket. Among these people are Forex traders – people that predict the price movements of various currencies from around the world in order to make a profit. To do this, they need Forex brokers; so, the more “home traders” there are, the more Forex brokers will increase.

Entering the Forex Brokerage Industry.

Today, the sheer number and availability of online Forex brokers is staggering. You do not need to conduct major research to find one. Unfortunately, with this increase, a lot of unreliable forex brokers slide into the market and make promises they cannot keep (i. e. the promises of making money, low spreads or the most user-friendly trading platform available). Therefore, many new traders get sucked in, and in the long run they burn out all of their trading capital and leave the broker. Clients (i. e. traders) need reliable forex brokerage services; and those that don’t have one will lose out every time.

If starting a forex brokerage business is truly a passion, then here are three factors that should to be considered to become, and remain, competitive.

1. Don’t over-make your market.

Forex brokers get their spread cost between two currencies (i. e. EUR/USD) from the Interbank market. The Interbank market is simply a collection of major banks, hedge funds and financial institutions that are legally obliged to serve commercial turnover of currency investments as well as a large amount of speculative, short-term currency trading.

For example, if the Interbank market charges 1 pip on EUR/USD, a large volume of Forex brokers mark this up to around 3 pips. This means that they make a profit of 2 pips on every trade for this currency. In essence, they are making their own market by over-charging their customers. This is a certain recipe for disaster as this makes Forex trading expensive.

There isn’t anything wrong with marking up the Interbank market price, but the advice simply is – don’t over-do it. There are thousands of other brokers out there who will gladly take your customers by simply quoting a cheaper spread. This is especially relevant to the six most traded currencies. The last triennial central bank survey lists them in the following order: 1) US Dollar 2) Euro 3) Japanese Yen 4) Great British Pound 5) Australian Dollar 6) Swiss Franc.

Keep in mind, the US Dollar contributes around 85% to daily trading so this should be the primary currency to consider when making the market (i. e. devising a price for the customer).

2. Offer low or no commission.

A commission is simply a fee that customers are charged when placing a trade (a buy or a sell). This commission can vary depending on the currency pair traded. The aim is to make Forex trading as cheap as possible for the customer. Low spreads and no commission are exactly the type of trading they like and it is up to you to provide it.

Believe it or not, some forex brokers lie. They claim their trading is commission free, but all they do is pump up the spread cost so customers never receive the benefit. To accompany low spreads, low commission can work absolute wonders for Forex brokers.

The absolute worst thing you could do is to promise this, but fake it by pumping up the spread costs. This means the Forex brokerage owners do not want to wait and rely on volume of traders so they acquire as much as they can by faking it and overcharge them straight away. Unfortunately, a lot of brokers do this and end up losing customers.

3. Ensure world class support.

Alarm bells start ringing if customers have trouble undertaking standard activities such as withdrawing funds or simply being avoided when asking support questions about a forex brokerage trading platform.

To stay competitive, and in-tune with customers, support must be high quality and responsive. For instance, if a customer asks a question about your platform’s usage, support must provide specific instructions on how to resolve the issue. Also, withdrawing funds should be a seamless process that does not take more than 2 days to process. It is small factors such as this that will eliminate any doubts in the customers’ mind about your services.

Dragan Lukic is a professional trader and a trading educator. He has years of experience in working with Forex brokers and has helped people from around the world get started in this industry. Forex trading is his passion which he educates through his company – Capital Forex Training.

— YFS Small Business Contributors.

We are a diverse group of early adopters, innovators, entrepreneurs, startup enthusiasts, influencers and small business aficionados. Stay connected to YFS Magazine as we share our unique perspectives on startup, small business news and entrepreneurial culture.

In my opinion the most important quality of a forex broker is transparency and honesty. Since there are so many rip offs in this industry it is more than important to treat clients well and deliver them what you claim on your forex broker website.

As you said if a forex broker plays games on its clients its already dead because nowadays there are some options where you get what you need to be a successful trader without being worried to get fooled by your brokerage.

Latest Must Reads.

Editor Picks.

Popular Articles.

Top Picks | From Our Editors.

Read The Latest.

Top Picks | Start A Business.

Thursday 21st December 2017.

© 2009 - 2020 YFS Magazine. All rights reserved. YFS, YFS MAGAZINE, AND YOUNG, FABULOUS & SELF-EMPLOYED ARE TRADEMARKS OF YFS MEDIA.

Get superior entrepreneurship advice so you can build a remarkable brand.

Fresh, provocative, and insanely addictive content delivered weekly.

Sign up for YFS Magazine’s FREE agenda setting newsletter and work smarter.

Professionz.

Jobs, Business and Careers Guide.

How to Start a Forex Business, Foreign Exchange and Currency Trading.

Modern progress owes much to the growing impact of information technology. Information technology has cast greater influence on contemporary businesses. Most of the modern businesses are now dominated by internet. Forex business is one of them.

How To Start A Forex Business.

Foreign exchange business is the abbreviated form of foreign exchange. It involves buying and selling of foreign currency. General rule that dominates the business is buying foreign currencies at low prices and selling them at high prices.

How to Start A Foreign Exchange (Currency Trading) Company.

Starting a forex company involves greater resources. If it is an offshore forex company that you are going to start, make sure to develop and design your business so that you may gain from trillion dollar of global forex trade. Establishing an offshore forex company requires, in the first place, to get in touch with a person or counseling agency that may guide you in the license obtaining process. Then, you should organize details regarding the jurisdiction within which your company is likely to operate. Insist with the counseling company to give you more than one option. Also ask the counselor to offer you credible reasons why a particular jurisdiction would be helpful in growing your business. There might be some jurisdictions where you can get all your paperwork done easily but they may not turn out to be right places for your business.

Related Posts.

How to Start a Forex Business - Forex is the process of simultaneously buying one currency and selling another. If you know. Online Share Trading Jobs in India - Gone are the days when brokers run to the stock exchange floor and place orders. How to Start Trading Business - You must be having a fair idea of what trading is all about? It is. How to Start a Business without Money - The very title of this topic may startle you! You must be thinking whether it. Translation Jobs in India - Translators jobs in India offer huge scope to professionals. As multinational companies have started investing.

Post navigation.

7 thoughts on “ How to Start a Forex Business, Foreign Exchange and Currency Trading ”

Dear Sir, I am technical qualified and having 10 years experience in different manufacturing industry. Now I want to start my own business. I also have the capacity to invest up to 10lakhbut I do not have any business idea in mind. Can you please help me?

Hello dear friend, actually foreign exchange business is the most valuable and powerful bossiness in the world. I have some idea and experience to begin this business. I want to know about legal registration process. Can you forward me the details?

I want the full details of money and currency exchange business. I have do not have license and do not have much idea on how to start forex business? But I am really interested in start this, as I think its good business.

Hi, I want the full details of stock and currency exchange business. I have do not have license and do not have much idea on how to start forex business? But I am really interested in start this, as I think its good business.

Hello, I am under graduate. I am not getting right kind of job because of my minimum education qualification. I want to start foreign exchange business as I am capable to invest and I want to know what will be the procedure and what will the investment to start this business. Can anyone help me out.

Hi, I want to start money exchange business. I need information on following.

1. What is the procedure for getting license?

2. How many licenses are require?

3. Are there any advisor for providing license?

Hi, I want to start money exchange business. I need information on following.