How Beginners Can Get Started in Forex Trading
Forex trading is a well-known strategy for individuals looking to build wealth, achieve life goals and enjoy a high degree of financial independence. People like forex because of the benefits that come with this financial instrument.
Unlike the stock market, the foreign exchange market is open 24 hours a day, five days a week. This means that you can trade currencies and make money almost anytime through a fair forex brokerage firm.
What’s more, the foreign exchange market is accessible to anyone. Unlike other markets, you don’t need a huge capital to execute trades. With the right knowledge and skill, you could profit from this potential investment.
Just like any income-earning venture, you need to take a reasoned approach to forex trading. If you’re thinking of earning money by trading currencies, take note of these steps to get yourself started on the right foot:
Understanding the jargon used in forex is critical to the success of a currency trader. Misinterpreting or misunderstanding the terminologies could cost you. If you come across terms you don’t know or understand, look it up before trading.
A few of the terminologies that beginner forex traders should know are:
- Pip – This refers to the amount of change for a currency pair. Here’s an example: If the bid price for EUR/USD goes from 1.1889 to 1.1888, the movement in price represents 1 pip or 0.0001.
- Spread – The term denotes the difference between the sale price and the purchase price of a currency pair. Popular currency pairs, such as the EUR/USD have a small spread. On the other hand, less common pairings like the Mexican Peso against the South African Rand have a large spread.
- Margin – This refers to the amount of money you need to deposit to trade and maintain a forex position. Look at the margin as a “security deposit” with the broker.
On top of learning the terms surrounding foreign exchange, you must know how to read quotes and charts, determine when to enter and exit a position, learn factors that influence the price of currencies and more. The right knowledge allows you to make wise, calculated and well-informed forex trading decisions.
Choose a Reliable Foreign Exchange Broker
When you’ve mastered (or at least become familiar with) the basics, your next step is to pick a trustworthy broker that facilitates online forex trading. Keep these factors in mind when selecting the right broker:
- User Experience – The trading platform should be simple to use. It should also have everything you need to flawlessly execute a buy or sell transaction.
- Customer Support – The broker should have available and reliable customer service agents who deliver assistance should you encounter a technical issue with the platform.
- Type of Account – Brokerage firms may offer several account types to satisfy the needs of various kinds of traders, such as beginners, scalpers, day traders and experienced retail traders. If you’re just starting, stick to the basic or standard account.
- Account Balance Requirement – Brokers set a minimum account balance that you need to meet. Opt for brokers that offer a small account balance requirement.
- Trading Support – You’ll want a broker that helps you profit from your trades. Choose one that gives you access to professional trader support.
Practice Forex Trading
Before opening a real foreign exchange account, you’ll want to get your feet wet first by performing practice trades. Some brokers offer demo accounts to help you become familiar with the real-time dynamics of forex trading.
Sign up for a demo account to boost your knowledge on foreign exchange markets, apply fundamental and technical analysis and come up with a personal trading strategy that will help you achieve your goal.
During this period, you’ll also develop habits that will make you a successful forex trader. You’ll learn how to be patient, when to cut your losses (or reap your gains) and trade currencies objectively.
Sign up for a Forex Account
Once you feel ready to trade currencies, open a real account with us. Fair Forex offers one of the lowest and enticing spreads and commissions in the world.
We also offer expert support along with free indicators and signals to help you succeed. Whether you’re a pro at foreign exchange trading or a complete beginner who’s still studying how the market works, we’ll give you the resources and assistance you need to boost your profitability.
Open an account today.