Starting a forex business? Here’s what you need
It’s hard to imagine a space that’s bigger or more lucrative than the forex market, which saw its cumulative value surpass $2.409 quadrillion in 2019.
However, while it has never been easier to access this marketplace, achieving a viable and sustainable profit remains far easier said than done.
In this post, we’ll offer some tips for those looking to launch a venture in the forex space, while asking what steps you need to take to achieve success.
- Getting Started – Do You Require a License?
There’s a great deal of confusion about trading on the foreign exchange, particularly given the role of the Financial Conduct Authority (FCA) in regulating and licensing online brokerage sites.
While you’ll definitely require a license if you intend to offer a brokerage service directly to other customers, however, this isn’t a necessary requirement if you want to operate as a sole trader.
So, if you’re simply trading using your own capital and aren’t investing resources that belong to any other individual or agency, you can get started without the need for a license.
This understanding, complete with full knowledge of the forex market and a keen sense of determinism (which allows you to recognize the underlying laws that govern change within the space), can help you to launch your venture on a sound footing.
- Expenses and Choosing a Reliable Broker
The next step is to choose a viable UK forex broker, who can provide you with real-time access to the market and facilitate a high volume of trades within a short space of time.
It’s important to choose a platform that has been fully licensed to trade by the FCA, however, while also prioritizing those that can connect you to a broad range of markets and technical indicators.
This allows you to diversify and scale your investment efforts over time, while informing your trades effectively and borrowing from a huge knowledge base.
At this time, you’ll also have to factor in your brokerage fees, as while these tend to be minimal in the forex market they will exist in one form or another. These fees should be factored into your capital requirements, particularly as you look to optimize your holdings over time.
- Organize Your Capital and Practice Before Investing
Before you start trading with real money, it’s important to gain real-time experience of the forex market while simultaneously organizing your capital.
The former is far more challenging, but fortunately most forex platforms offer you access to a demo account for a period of between three and six months. This enables you to trade in a simulated, real-time marketplace, without having to risk your hard-earned capital.
As a result, you’ll be able to hone your trading strategies and test them out for real, so you can gauge their profitability and make incremental improvements as required.
In terms of trading capital, you can open a real money trading account for as little as £10. However, we’d recommend starting with a minimum of between £300 and £1,000, in order to create a contingency plan for any associated losses that you incur while trading.