How to Get Started With Forex Trading
Get Started With Forex Trading
Considering lot of information available and the markets are more open than ever, people interested in investing should consider Forex trading.
Why Look at the Forex Market
The forex market is unique for a number of reasons. Here’s why:
- Sheer trading volume
- Highly liquid
- Dispersed widely across the world
- Open 24/5 – closed on weekends
- Interesting to follow because currencies are affected by many factors
- Good way to find out how a particular economy is doing
- Leveraging possible which directly impacts profit and loss and account size
Questions to Address Before Embarking on Forex Trading
A few important questions to look at before getting into any kind of trading are:
- Do I really want to assume the risk?
- What is the minimum amount that I need before I can open an account?
- How does one pick a broker?
- Should I start with a demo account to get acquainted with the rules and the market before I go full time?
How to Get Started in Forex Trading:
Here are some answers to these questions and once you understand what is involved, you can start trading and participate in the Forex market. In order of importance:
1. Choosing a Good Broker: this is a very personal choice. Some brokers may give you options – so check around and choose the one you feel most comfortable with.
2. Open a Demo Account: Once you have decided on a broker, go ahead an open a demo account. You will get a trial period of a month to work with them and use fake money to do trades to get a feel for the process. You can see how the market works in real time and also how to use all the tools available with the account. You will get a better insight on how to manage the money in the account.
3. How Leveraging Works: Forex trading works on trading margins, also known as leverage. This is a good tool but has to be used with a bit of caution. Forex brokers offer a leverage margin ranging between 50:1 and 400:1. The higher numbers do not require too much money in trading.
4. Read Charts: Before getting into trading, get very familiar with reading charts to understand the information given on them. There are 2 types of charts – short term ones which will let you follow the market by the minute. The long term charts will let you see long term trends which will give you a good idea of what to expect. You will find that you are comfortable with one style over another.
5. Making Your First Trade: This may be a nerve wracking and exciting time. Once you are completely familiar with all the technical aspects and real money is in play, you will be a bit emotional. Stay level headed and use the same methods as the demo account.
Any trading is a learning experience and always different. Enjoy your experience and learn from your mistakes.