I’m a fan of minimalistic approach to everything. Everything should be simple and direct to the point. Though you may see professional traders have this huge screens stacked on top of each other like a matrix control panel, I prefer to do a more subtle approach on my trading setup. I think that going for the simplistic approach allows me to be out of the house and travel and not think about trading too much. Don’t get me wrong, there are a lot of successful traders who have screens on all parts of their house so they won’t lose sight of the market (even on the toilet, yes… Some people are addicted to this). For me I think this is overkill. 🙂
I trade using my computer. A 2 year old iMac computer that I bought the first time I hired my first employee. I use this computer for my other business and it holds quite well doing stuff and especially trading. Personally, you don’t really need a powerful computer to trade. You just need, well… a computer. Any computer will do. If trading is the only thing that that computer will do, you might as well settle for the cheapest one.
If you are planning to travel and stay on the road most of the time, I would recommend buying a laptop instead of a desktop computer. Or a reliable smartphone. It has never been so easy to trade while traversing a mountain range or getting lost in a jungle. Cellphone signals are strong everywhere.
A Stable Internet Connection
There’s really not much of a choice here. There are only a few internet providers in the Philippines and its a good service. But its a must have. You can not trade if you don’t have an internet connection.
You may want to open a dollar currency account from any banks of your choice. Ask them if you can do international wire transfer with that account if you decided to open an account with them. Most banks will be happy to answer any questions you have for this. I opened my dollar bank account with $500. They said its the minimum requirement to maintain the account. So that means, your capital should be larger than $500 because you’ll be sending that money to your broker (more on this later) as your trading capital. What I did was to go to the nearest money changer in our local mall and bought some dollars using peso. It was P45 per $1 that time. As of this writing its around P41 – P42 so you are buying dollars cheap right now. 🙂 I head back to the bank and hand over my $500 bills. They created my account a few days after.
Initial Trading Capital
How much do I need to get started trading forex? This is the question I get a lot. And there is no straight answer to this. I started trading with all the money I have. Literally. And this is not something I would recommend to all people. Its something a stupid motherf*cker would do. So to determine if you’re still sane, you may use this guide to determine how much money you need as your trading capital.
Let’s say you have a living expense of P20,000 per month. You decided that you will get a return of 10% per month from your trading. That means, you must have a capital of P200,000 to produce P20,000 to pay your living expense from the return of 10%.
x = TARGET INCOME / % RETURN
x = 20,000 / 0.1
x = 200,000
Where do you get the 10%? That will come from your trading. And in other words, its the trading system you use to generate 10% of return. There are ways to determine how much a trading system make in percentages. Don’t worry about this for now.
Forex Brokerage Account
A forex brokerage account allows you to buy and sell currencies. They are a separate company that acts as a middleman to buy currencies from the market for you. It is a requirement since normal people like us won’t be able to buy currencies on our own, only someone with a license to transact business on the market can do that and those are the brokers.Popular brokers are as follows:
- eToro – Read my review here
- Forex Philippines Broker’s List
The forex market is a 24 hour market. But that doesn’t mean we should also be trading 24 hours. You also want to treat it as a business where you will trade at this certain time of the day and end at a specific time. It instills discipline. For me, I usually open my forex account to trade at 12:00 noon and trade plan my entry 1 – 4 hours waiting. After that, I’m done for the day and check it tomorrow by the same time. You may pick any kind of schedule you want, that alone is a good potential for a great business where you can have a lot of free time doing the things you are passionate about.
That’s all the things you will need when setting up your forex trading career. Its a no hassle business as you can see. No business permits, no documents, no employees, no space to rent, no inventories, no customers to please, you are your own boss and working at your own pace.
- Create your DEMO forex brokerage account from the list of brokers above. It is free and you can create a lot of demo accounts if you bankrupt each one. Try to play around with each broker’s trading platform and decide which one you think is more comfortable for you to use. You don’t have to trade for now, the goal is to be familiar with the trading platform.
- Write down in a piece of paper your trading schedule and try to mess around with the trading platform at that exact same schedule for a week.
PREV: Lesson 1: Personal Finance and Planning