Trading Forex – 6 Simple Steps to Start With Forex
Trading Forex is profitable and thrilling when you achieve decent skill level. Before that you will need to follow some important steps.
Trading on the forex market is undoubtedly winsome, especially if we consider the daily profit the forex exchange market makes. The six trillion figure that daily forex trading makes is far more than the stock market with its 23 billion per day. Besides this fact, currency trading can be as profitable as thrilling, especially when you achieve a decent skill level. If you are new to the currency market and aiming to become a seasoned forex broker smartly and securely, here are some critical steps to take.
1. Understand forex language
Forex can seem too complex at first sight. It’s because there are many new terms related to trading operations and strategies. Before opening an account and choosing the broker, it is highly advisable to learn the forex language and all the terms you will have to deal with. That way, you will be able to correctly read the market and lead informed discussions with more experienced traders.
It will also help you understand forex brokers’ reviews when checking them to choose the most reliable one. Don’t worry! You will not have to buy a dictionary and learn all by heart. As you start reading educational content related to forex exchange, you will naturally acquire these terms. Let’s just mention the most used and most important ones: currency, pairs, exotic currency pairs, trading margin, long term and short term position, a spread, a bid, and ask price.
2. Decide on currency pairs you want to trade
As a forex trader, you are going to trade in a currency pair. For instance, you want to sell the euro, but the only way to do it is in pair with some other currency. The most common currency pair is the euro/dollar but there are plenty of other pairs. Some are called exotic pairs since they are less traded but still attractive and exciting for investment for different financial or political reasons. In a nutshell, one pair represents the base currency and the second one is the quote currency. Supposing that you trade EUR/USD 1.11151 means that one unit of the base currency corresponds to $1.11151.
As a forex trader, you are going to trade in a currency pair.
3. Learn how to use the forex calculator
You are bad at maths but want to start trading forex. No worries! Forex is quite mathematical but be reassured that the gods of forex have already thought about that. So they made a forex calculator, which allows the traders to calculate the risks of their positions. This type of calculator does not have much in common with ordinary school calculators. There are dozens of them all over the internet and on many trading platforms. Their difference consists of different evaluations you want to make. Let’s mention some of them: the forex profit calculator, the pip calculator, the stop-loss calculator, profit-loss calculator.
All in all, this useful software helps you to shape your trading strategy better and manage your trading risks. So, don’t matter if you don’t have a clue about Forex or you are an experienced trader, there is a forex calculator to assist you.
4. Research forex brokers
The forex broker you choose is at the core of your trading success. You can select a reliable and honest forex broker, but there are several things to be aware of first. First of all, go for the regulated brokers who have clearly put their contact details on their websites, such as their phone number, email address, and headquarters address.
Then, be sure they have customer service available, such as email support or live chat. There must also be a way to communicate in your native language, so multilingual customer support is necessary. Lookup for the trading platforms they offer, such as mobile platforms, web-based platforms, or both. Check what the range of their trading instruments is. If it includes stocks, securities, cryptos, all the better. It proves they have a larger number of different clients.
Regarding trading conditions, also checks what is the minimum deposit and also if they are offering the possibility to trade on demo accounts. It’s crucial, assuming that you come into this as a newbie trader.
5. Personal or managed account?
When opening an account, you will have a choice to trade personally or to delegate your trading to the account manager. It may be better to start with an account manager before you are sure enough in your trading skills. It’s also the best option if you haven’t enough time to dedicate to forex. But stay away from those brokers who are offering unrealistic returns in profits. That implies that they are taking a considerable risk to achieve a high investment return.
6. Practice with a demo account
Just like in sports, half of success is achieved on the practice field. After analysing the market with charts of historical data of the currencies you want to trade, start practicing with a demo account. That way you will acquire the trading reflex and be able to manage funds on your own when you decide to invest the real money. Using the perks of demo trading will allow you to feel the real market and hone your trading skills.
The huge profit and sometimes the idea of becoming instantly rich entices many people to start trading forex. Forex trading is a thrilling activity. On the other hand, you must be aware that it takes risks, just like any trading. Emotions, as such, shouldn’t be your drawback. Knowing yourself and how to handle your emotions is necessary for successful trading. The point is to move towards your feelings, recognise them, change them, and adopt our trading strategy. Also, don’t forget to manage your budget rationally so you can avoid running your budget before making any profits.
Being a newbie in any field can be daunting and stressful, but only at the beginning. That’s why we gave you these steps to follow to feel more comfortable making your first investments in forex. Be patient, learn, and practice on a demo account, and the success will come naturally.