Just do it! Many may say that but this is nothing further from the truth.
Firstly,you need to do an assessment of your current financial situation. Is the funds you are using disposable? If these are money that should be used to clear your bills, you really need to reconsider.
Only risk money you can afford to lose.
Secondly, are your expectations correct? Meaning how do you see your forex trading journey. If you are expecting to turn $100 into $200 in a month, ( Thats 12874.63% per year performance! ) you may be very disappointed. Be realistic. Warren Buffett’s Berkshire Hathaway has generated an average stock price gain of 20.8% per year. In fact you are likely to take excessive risks in the name of a quick profit and end up with a margin call!
Thirdly, now that you have filtered out the obvious reasons that forex trading may not be right for you, it is time to get into details. It is reported that the foreign exchange market cap averaged around $5.1 trillion per day. That is huge!
Popular currency pairs include the EUR/USD, GBP/USD, USD/JPY, all of these covered in our premium analysis. Or you can even take an interest in less traded currency pairs such as EUR/CHF. There are tons of other factors to consider such as the spread you are willing to pay or if you prefer the fast paced action of highly liquid currency pairs or perhaps something slower. We wont go into the technical details here but you can read this article, How to Place My First Forex Trade? We like the structured presentation of the article starting from selecting currency pairs and building the knowledge up with spreads, lots and more.
A bonus and crucial point to note is to never forget to practice proper money management.
Proper money management will allow your account to survive, learn and trade another day when you hit your stop loss.
Consider these simplified scenarios:
Account of $100, Risking $20. A loss will set you back by 20% ($100-$20=$80) and you will need a performance of 25% to get back to $100.
Account of $100, Risking $3. A loss will set you back by 3% ($100-$3=$97) and you will need a performance of 3.1% to get back to $100.
The choice is obvious.