The foreign exchange (also known as "forex" or "FX") market is the place where currencies are traded.
To become forex trader, follow these steps
1 Decide if foreign exchange trading is an opportunity you want to explore.Foreign exchange trading for profit is not new, but non-institutionalized foreign exchange trading, is a new and exciting way for anyone to earn extra money. In fact, for some, this type of trading is lucrative enough to allow them to quit their day job. Foreign exchange trading from here on referred to as ForEx , is also referred to as forex, FX and spot trading in industry jargon.
2 Understand how ForEx creates an income stream.ForEx Trading is in effect the exchange of international currencies with a goal to extract profit in the exchange. ForEx is always traded in pairs. The currency pairs most often traded are the US dollar and the Euro - USDEUR, the US dollar and the Japanese Yen USDJPY, the US dollar and the British Pound USDGBP and so on.For example, you are going on a long awaited vacation to beautiful Jamaica. You show up at the airport and exchange your US funds for Jamaican currency at the going rate. Let us assume at that moment, the exchange rate is $1 US = $70 Jamaican and you traded out $100 US for $7000 Jamaican. Since you are having so much fun, you decided to trade out another $100 US, but this time the teller handed you $8000 Jamaican. There was no computation error, the Jamaican dollar value changed against the US in your favor giving you 14% more in return than the day before. Now imagine this scenario repeating itself several times per day via Internet from the comfort of your home; and you now understand what it means to live the life of a ForEx Trader.By the way, a 14% - 60% return on a single ForEx transaction, or group of transactions is not an impossible rate of return for ForEx trading. Excited? Ok, here is how.
3 Obtain the necessary tools.Data feed is crucial for ForEx trading as the value of any given currency changes by the second. High-speed Internet is mandatory to extract profit with the changes in the rates. ForEx Trading can be done wherever you have Internet access, so feel free to make your vacation cottage your permanent home. Unlike the New York Stock Exchange and other financial institutions, the ForEx market is open for trading 24 hours.There are many charts you may want to reveiw before making a trade decision. The more monitors you have, the more charts you can see at one time, the more confident your decision to execute a trade.
4 Learn the Business.Just as with any new career, training is necessary to become a ForEx Trader. ForEx is not the kind of trading you can figure out as you go. Trial and error is definitely part of the learning curve, but since errors mean losing money, learning the business is not an option. To learn more about ForEx, in addition to resources you might find through a search engine, check out the following books: 'Trade What You See' by Larry Pesavento and Leslie Jouflas, and 'The Secrets of Economic Indicators' by Bernard Baumohl.
5 Practice what you have learned and create trading strategiesOnce you have invested some time in learning how to become a ForEx Trader, applying your knowledge in a live simulation is the next step. Most ForEx Brokerage firms offer free Demo accounts that mirror their live versions. These demo accounts offer between $10,000 to $50,000 demo dollars to practice your trading. The currency rates are the same as the data feed in their live account versions so any profit/loss you incur are an exact replica of how you would have performed. Even professional Traders continue to use demo accounts to test and back test new strategies. To find free ForEx demo accounts, you can do an internet search, or check the resource list here.
6 Open a live trading account and start trading for profit.Armed with the confidence gained from profitable trading in the demo account, it is now time to make bankable profits. Convert your demo account to a live account by depositing money as per the site instructions. If your Brokerage offers a mini account, you can start trading for profit with as little as $500 which can then be leveraged into multiplied profits.
7 Keep a journalAs you trade, keep a journal or track your strategies in whatever way works for you. Tracking your strategies is the only way to determine what works and why. When you find a strategy that works, work the strategy consistently and watch your account grow its way to offering you a better quality of life.
No you must need some money, that depend upon the trader where you want to open and varies from trader to trader.