Forex trading is a growing industry that helps people make money online by exchanging currencies. Most people trade on a part-time basis, while a smaller group trades full-time. In this article, we will look at the best way to run your forex trading as a business.
Perfecting your craft as a trader
Trading is a tough business, where most people fail. The common estimate is that more than 80% of all people who open a forex trading account in a given month will fail. Therefore, it is a mistake for you to start trading full-time without giving it a trial first.
As a forex trader with more than a decade in the industry, I recommend that you spend at least one year of day trading before you shift to a full-time basis. This will help you in several ways.
First, it will help you develop a good and workable trading strategy. Among the most common trading strategies are algorithmic trading, scalping, swing trading, and pairs trading.
Second, it will help you gain more knowledge on the different types of currency pairs in the forex market and the ones that suit your trading style. The most common types of these pairs are majors like EUR/USD and USD/CHF, minors like EUR/GBP and AUD/GBP, and exotics like EUR/ZAR. These pairs are typically traded differently. Therefore, taking time before you start trading will help you get started.
Third, spending this time will help you trade under different market conditions, such as during ranging markets and periods of high market volatility.
You should then quit your job after you have successfully created and tested your trading strategy. Also, as part of your money management strategy, you should ensure that you have a safety net in case your trading business fails.
Test different brokers
Also, you should use this period to test different types of forex brokers. You can decide to run your trading operations from a retail broker like FxPro, easyMarkets, and ATFX. If you use this model, consider reliable brokers and those in the business for a long period. The broker should also offer additional tools like mobile trading, advanced news and analytics, and lower trading costs.
Alternatively, you can run it as part of a prop firm. For starters, a prop firm is a bigger company that provides capital and trading tools to its traders. They then take a cut from the profits that the traders make. Day Trade The World (DTTW) is one of the most popular prop trading firms globally.
Many people who trade as a business prefer using prop firms because of the funding they provide. Most also offer advanced training since their capital is on the line.
Set your trading office
After deciding that you want to do forex trading as a business, you should move to the next step of creating your trading office. Most people are comfortable trading in their bedrooms, spare rooms, and even garages. This is doable since you don’t need a lot of things to start your trading journey.
Below are some of the things you will need.
- Room in a conducive environment. You need a room that is free from noise and distractions.
- Fast internet connection – As a full-time professional forex trader, you need a fast and reliable internet connection. Most people buy internet services from two providers to ensure that they have the internet all the time.
- Computers – A single computer can serve you well but having multiple screens will serve you better. You can have one monitor for analysis, another for news, and another for other office work. Ensure that the computer has high specs.
- Virtual Private Server (VPS) – A normal connection between your account and your broker is fine. However, to ensure faster communication, ensure that you have a VPS, which is a tool that boosts your connectivity.
- Television screens – We recommend that you have at least two television screens that will have CNBC and Bloomberg. These platforms are good for breaking news and views from analysts.
Other things you need to have in your trading office are comfortable desks and chairs. Also, you should invest in a quality file management system to record your transactions.
If you have a good trading strategy and a well-equipped office, you are ready to run your forex operations.
Hiring new workers
As you grow your business, you will need to hire new people. Depending on your size, some of the professionals you can hire are analysts, office assistants, traders, developers, and marketers. Analysts will help you find trading opportunities. An office assistant will help you manage your schedule and record your trades.
As you expand, you might need to add more traders to your office. This is especially necessary when you are using the proprietary model. To do this, you will need to hire people who are passionate and knowledgeable about forex trading. You should also allocate a lot of your time training them about how the industry and your strategy works.
You can also hire successful marketers to expand your business by raising capital from outside investors. Most traders don’t do this, though.
After hiring the staff, you need to educate them about the business, set their remuneration, and hand them the terms and conditions.
It is possible to shift your simple forex operation to a real business. Many people I know have done that. However, you need to ensure that you are doing it the right way. This means that you should have a good trading strategy and test it for a while. Also, ensure that you have money set aside for emergencies since it is possible to lose most of your funds. Finally, set up a good office and hire people who share your passion for trading.