How To Start Trading In Forex

How To Start Trading In Forex

Forex trading, also known as Foreign Exchange or FX is the largest market place in the world where currencies are traded. Forex has an average turnover in excess of $4 trillion per day; making it the world’s most traded market. The main participants in this market are national banks, commercial banks, insurance funds, financial institutions, companies, and individual investors.

Forex trading can be an exciting hobby and also a great source of investment. It’s highly possible to make a lot of money without necessarily putting too much money in your original investment. Predicting the direction of the market can also be very interesting.  If you are new to forex trading, you need to first learn about the basics; otherwise, you might end up making huge losses as the market is very volatile.

The first step is choosing a forex broker. Just like any other market, there are many forex traders to choose from. Some brokers offer specific options that some traders might thrive on; with others, it’s usually a different case. Therefore, it’s important to properly review and compare the options of each trader and choose one that makes you feel more comfortable. Likewise, choose a broker who is legit and reliable.

The second step is opening a dummy account. Majority of the brokers offer at least a 30-day trial of their trading platform. This gives you a chance to train yourself before venturing into live trading with real money. Trading with a demo account helps you familiarize yourself with the broker’s trading tools in a way that you will feel fully comfortable with the trading platform. Trade in the demo until you can make consistent profit. Most importantly, understand the basic forex terminology.

  1. Learn About Leverage

Typically, forex trading is carried out leverage or trading margin. Leverage is a very useful tool in the trade. However, it can be very dangerous if not used correctly. Normally, forex traders offer 50:1 leverage up to 400:1 leverage. This basically means that the higher the number of leverage, the lower the amount money required to put on a large trade.

  1. Practice Reading Charts

Before you venture into live trading with real money, you should first familiarize yourself with the charts and how they work. Longer time frames show you how the market moves over longer periods. They show larger trends. Shorter time frames give you the idea of how the market moves each minute.

Majority of charting software’s offers chart as candlesticks, bars, and lines. You can choose any type of chart that you feel more comfortable with.

  1. Make your first Live Trade

With every single bit of information on your fingertips, you should now start your first live trading. Although the demo account prepares you for all the aspects of live trading, it’s normal to feel a bit nervous. However, you should gather your courage and trade using the same exact methods you learnt on the demo account.

Making mistakes in trading can cost you a lot. However, if you can learn from those mistakes, you might be able to avoid them in future. As you continue practicing, you will find that trading is not as hard as many people think. Using the right strategies can help you become a very successful forex trader.

Categories: Tutorials

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