How to get started trading in Forex

How to get started trading in Forex

So you’ve been reading all the articles on the internet about how to make big cash through thousands of tiny fractions of cents, or Yuan or Euros or yen, which are the natural casualties of the everyday, real-time fluctuations in the foreign currency markets. Excellent choice!

While trading in forex should hardly be considered a sure-fire way to get rich, or as any kind of get-rich scheme at all, it can be a great addition to your investment portfolio, providing you with steady, incremental growth on your investment.

But how do you get started? Well, there are a few things you definitely should do right off the bat.

First, you’ll want to get more familiar with what the forex market is, exactly, and how the forex market works, and some of the major pitfalls you’ll want to be extra careful to avoid.

Let’s be clear here, forex (or fx) refers to the foreign exchange market, or currency market. Even though it’s not often discussed, in fact is it the largest market in the world, with a daily average transaction volume of over $5 trillion.

Forex is a decentralized market, so there are no set rates, although it tends to be fairly self-regulating, and actually is an important factor in the stabilization of international markets. Speculators, usually financial firms and banks, leverage the relative values of currencies and differences in countries’ interest rates. Each trade must be matched by an opposite trade, making forex one of the most liquid markets in the world. Because of the volumes, profits (and losses) can be significant in only a short amount of time.

As in all markets, different investors have different needs and tolerances for risk, which affects their strategies. Some go for the infrequent, big wins. Others prefer slow and steady. That’s the second thing you’ll have to figure out before you dive into forex trading. What is your goal? What is your timeline? What is your tolerance for risk? Knowing the answer to those questions will help you make better decisions once you begin.

Once you feel comfortable with the basics, you can look for a brokerage or platform that will help you reach your goals. Forex moves fast, so you’ll definitely want some hand-holding, at least early on. There are a lot of options to choose from, so make sure to do your research and be honest with yourself about your risk tolerance and needs for return. Do you need a lot of reassurance? Want to be able to call a real-live human being when you’re got a question or concern? Or are you ready to dive in and learn as you go, working with basic tools from a web- or mobile-based platform? Only you know the answer to that.

Finally, be prepared to adjust as you go. As with any new investment opportunity, you’ll get smarter as you get further into the strategy. Don’t be afraid to correct your course when it is warranted.

All told, forex is a great market for even the small, casual investor. But as with any market, there’s a significant amount of “buyer beware” to be aware of. Make sure you’re deliberate in your choices and forex will be a good investment tool to add to your toolbox.

 

Categories: Tutorials

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