Does It Cost Money To Start Forex Trading?
Welcome to a new blog post. This blog post will be about If trading Forex costs money. Please remember I am not a professional trader and I am not giving financial advice. These blog posts are here to guide and give my own opinion on trading the markets.
Does it cost money to do Forex trading?
If you are trading through the foreign exchange using metatrader 4 or another platform you will experience the cost of fx trading. Whether you are trading the Forex market using an ea, Forex news strategy or trading like the banks you will need to pay certain costs and you will experience the typical cost of trading losses. I am personally in the UK and there are some certain things you can do, like spread betting which is tax free in some cases. I am not an expert when it comes to taxes so please see a tax advisor about this. The Forex market is not free and you will need to make sure you factor in these costs when trading the currency markets.
When you're trading you have the spread costs which is the cost that you pay when placing a trade. This is the difference between the sell and the buy price and when you take a trade that automatically gets deducted from your account or capital. If you have a look at the currency exchange and the exchange rate on a trading platform, you will see two prices. Even though they still get taken from your account this is only an unrealised loss. This means that when the trade goes into profit and it goes past that cost of the spread the unrealised profit that you are now in is not the cost that you initially saw from your capital. Even though the spread can sometimes be a small amount compared to your overall capital and the amount of money that you could be making us and tried this is a cost of trading and you do need to factor in that you will have a spread when you're trading.
When you start trading you will naturally get losses these are losses that you can't help it's just part of trading and when it gets the stage that you are making consistent money these losses will be something that you look at in terms of and natural process. Every strategy has losses and making sure your strategy has the correct money management is crucial to not having a strategy cost you more than needed. Think of it in terms of business and spending inventory costs or marketing costs, it's something that needs to be done and something that can't be avoided. Trading Is a business as well and it needs to be treated like one, therefore the losses that you're going to incur when trading a normal strategy is something that you should expect and something that you shouldn't be worried about. Something that can help with the losses that you incur is knowing that your strategy is profitable something I've found that helps to backtest before you even do a live trading account full stop this is the confidence that the strategy that you are trading is profitable and over the long-term makes money. When your trading in your getting those losses that you should be expecting it's not an issue for you and you'll be able to go through the bad patches of trading knowing that your strategy is profitable.
If you have a strategy that is based on short-term trades then you will have a larger cost to someone trading over days or weeks. This is due to the spread when trading the currency markets. I know Mark Douglas talks about the cost of trading in his videos a lot and I recommend you watch his content to learn more about this.
Outside of trading you need to factor in your computer, monitors, WIFI, house and other external costs that enable you to trade the markets. This is all cost of doing business and you need to make sure you can cover these costs through your profits. This is something that most new traders don't think about but if you are going to treat trading like a business you need to make sure you think about everything related to it and create something similar to a business plan. The more detail you can go into your business plan the better because It’s gives you clarity and vision for the future of your trading career.
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