A Step by Step Beginners Guide to Forex Trading
by Abdul Aziz Mondal Investing Published on: 31 May 2018 Last Updated on: 18 October 2024
Also known as the currency market, the foreign exchange market is bigger compared to the renowned stock market. For instance, it may take close to thirty days of trading in volumes on the New York Stock Exchange – the most extensive stock market trading platform around the globe, to be equivalent to a given day of a Forex trading. More significant is the fact that the worldwide currency market operates 24 hours each day and five days every week without closing. It is such a flexible business model that lures traders who desire to build their own portfolio quickly. However, it is essential to understand that you can either make or lose fortunes with Forex.
Forex is among the most exhilarating experiences as well as the most volatile type of investment opportunity available in the markets today. In its basic form, Foreign exchange trading means buying and selling currencies, as well as betting for and against currencies of various countries. The model entails excellent liquidity in addition to immense and one of the best ways to make money in the market besides the high risks that come with it.
Opening an initial forex position can be a thing of apprehension for the new trader. It does not matter the number of times the trader has practiced on a demo account because hitting it off on the real money platform is a different ball game altogether. When emotions come to play, there are some mistakes that abound to occur. Such errors include using the wrong order, clicking on the wrong chart, and applying the wrong lot size to the trade among others. Unfortunately, some of these mistakes were made by professional traders. As a result, the big question should revolve around ways that one can prevent such errors from either taking place or from damaging the account if they occur.
Before anyone opens an account to begin taking trades, they should do themselves a favor by learning how to trade forex for beginners. Here is an excellent starting point with the essential forex trading strategies for beginners. In addition, you can click here to get brokers rankings by TopBrokers.
Steps on how to trade forex successfully for beginners
1. Select a Broker:
One of the factors that make the forex market stand out from the key stock exchanges is that Forex is a robust market, decentralized, unregulated as well as wide open. As such, one has to be extra cautious while selecting the top forex brokers. Even though there are many legitimate brokers to select from, there are also fly-by-nighters to watch out for, who open an illegitimate site, scam some deposit of money from a bunch of investors, and then shut down completely. It is not a new thing, it has happened before, and the odds of being caught up in it is high. The best bet would require one to find or scout for a busy Forex forum and request for input from seasoned traders about the type of brokers they prefer.
A beginner should then examine in detail and identify the specific brokers that belong to the voluntary regulatory agencies such as CFTC or NFA in the United States of America, the ASIC in Australia, and the FSA in England. Even though it is not a requirement for brokers to maintain a membership in any of the organizations, it is necessary for those who want to be regarded as credible.
2. Open a Demo Account:
A fantastic feature with Forex trading is that it allows the traders to perform everything from the comfort of one’s home. A good internet connection, for instance, is critical for successful traders. A bit of sound money management techniques could make one be part of the small percentage that gets filthy rich.
As a primary beginner’s guide to forex trading, the important advice is to practice with a demo account before one makes a risk with real money. Various genuine brokers provide demo accounts for anywhere from 30 days to infinitude. The platform opens a window to practice strategies without risking real money while staying abreast of real-world conditions.
Using a demo account is mandatory for a beginner who wishes to understand the whole aspect related to Forex trading. Beginners should realize that they will be trading against seasoned experts who spend most of their time, every given day taking money from laypersons. One has to go toe-to-toe with them until they comprehend the game.
3. Are You a Fundamental or a Technical Trader?
Forex traders are in two groups. The first group depends on technical analysis (TA) while the second group on fundamental analysis (FA). A TA trader analyzes price movement by following how it reacts to a set of indicators that one selects on its screen. Key decisions to sell or buy rely upon mathematical calculations carried out behind-the-scenes with the signs.
However, FA traders study the fundamental economic as well as political factors at work between and within various nations. Trading entails exchanging the currency of a particular country for another. The main factors that they use to measure the relative strength or weakness of currency in the country include political stability, unemployment, housing, and GDP among others.
4. Hosting for Forex:
The type of hosting account makes a significant difference in the long run. Considering the VPS hosting should be a priority for beginners. VPS can boost your trading experience in many aspects. VPS hosting is also very useful for forex traders who travel frequently. Forex trading is a process measured in seconds, and it is a requirement that one trades through a connection that hardly crashes, hang-up, or expose one to extreme latency delay. The Virtual Private Server hosting account sees to it that one has access to critical system resources such as Ram, memory, and bandwidth.
Understanding forex trading for beginners is a step by step procedure as indicated above. A wise starter in the forex trading world should always stay abreast with forex trading made easy for beginners which will dictate when one can close and open trades, the amount of money to risk, and much more. The secret to one’s eventual success depends on how well they can implement the tips.
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