How To Start Trading Forex
Have you decided to start trading on forex but don’t really understand how to start trading forex? If so, don’t worry. This guide will help you get started on forex trading and be one step closer to becoming a successful forex trader.
What you will need to start trading on forex:
If you don’t have a basic knowledge of the foreign exchange market, you should first read How to Start Trading Forex. You can then follow up with your own research or continue reading this article as we take a look at How to Start Trading Forex.
Where do I trade?
The best way to learn how to trade is by practicing with play money for several weeks before putting any real monies at risk. This sounds obvious but many new traders find themselves risking too much too early and end up losing all their stakes within a few days or weeks and give up forex trading altogether because they feel it’s just not worth the effort. Because the margin rates are extremely low, it’s also important to diversify your trading activities. This means not putting all your eggs in one basket so to speak.
Trading on the currency market is conducted over the counter (OTC) which means that the actual exchange of currencies happens directly between two parties (whereas on stock markets it is done through an intermediary, e.g. EUR/USD = Euro vs US Dollar). As you’ll be taking trades with other traders, this means you can’t predict when they will enter or exit the market as only you are aware of your own intentions. It’s incredibly frustrating to take a trade and then see another trader come along 5 minutes later and take out your entire position! To avoid this situation happening too often, you should avoid trading during high-activity hours where many other traders are active.
What to look for in an online forex broker
Forex brokers offer two types of accounts, a practice account which is very similar to the real thing minus the risk of losing money, and a live account which allows you to trade with actual funds risking losing or win real money. Which type of account you open depends on how much experience you have with forex trading so if you’ve never traded before it’s best to start with a practice account first just to get your bearings right before putting any real dough at risk.
Many new traders find that they lose their entire bankroll within just a few days because they’re not familiar with all the ins and outs of trading, especially not how to protect your capital. How much you can expect to risk depends entirely on how much experience and knowledge you have of the markets so start small and aim for a 2:1 reward/risk ratio.
You may also want to look at commission costs as some brokers charge exorbitant rates which eat up all your profits. It’s worth shopping around for a better deal if you trade frequently. You should also pay attention to other costs such as currency conversion fees or spreads as these can vary greatly from broker to broker, sometimes even within the same company depending on the account package selected. There are many online forex brokers out there offering attractive conditions but do shop around before opening an account with anyone in particular as every trader is looking for the perfect trading conditions.
How to Start Trading Forex
Once you’ve selected an account type (practice or live) and opened up your forex broker’s website, it will be time to familiarize yourself with the platform. You can start by typing in one currency against another to see how currency pairings work. For example, if you’re interested in trading EUR/USD, find this currency pairing on your trading platform and enter an order for 100 Euros. If you then click on the ‘buy’ button, you will notice that the number of Euros changes into US Dollars while your balance is either raised or lowered accordingly depending on whether you bought or sold the currency pair respectively.
Once you understand how a market order works, you can start to place limit orders which give you more control over the prices of your trades.
How do I choose a broker when learning how to trade forex?
Once you’re familiar with how different market and limit orders work, it’s time to open up an account with a forex broker. There are hundreds of brokers out there so finding one that suits your needs may take some time but once you’ve found the perfect match for your trading style and strategy, opening an account is very easy if not automated. You will need to provide personal information about yourself as well as proof of identity in order for the broker to comply with international banking standards (know your client) before he processes any transactions on your behalf.
How long does it take to learn how to start trading forex?
Forex brokers usually process applications pretty fast so you shouldn’t have to wait more than a few days before your account is up and running. How much can I expect to earn?
This depends entirely on how good of a trader you are mostly but it’s possible to turn $100 into $1000 within just a few hours which makes trading very exciting and profitable (and addictive) if you know what you’re doing.
How do I get the most out of my trades?
There are many different strategies for making money while trading forex and everyone has their own way of doing things, however, there is one golden rule that should be applied while trading: don’t risk money you can’t afford to lose. That means no matter how well or poorly your trade goes, never risk more than 2% of your account balance. You should also remember that trading can be very exciting and you may want to take advantage of that intensity by gambling with the money you’ve worked hard for but this is something even veteran traders avoid like the plague.
How do I learn more?
Trading forex requires a lot of research, learning, and practice before you will start to make real money but it is definitely worth it if you put in the effort as this beats any job in the world hands down no matter how well paid or challenging it might be!
How do I keep my money safe?
Once again, there are many different strategies for managing risk while trading forex which is probably why new traders lose their entire bankrolls within the first few months while veteran traders are very wealthy. The best thing to do is make sure your forex broker’s website is secure by checking for HTTPS in the address bar before logging in or making any transactions.
How can I make money?
Trading forex requires a lot of research, learning, and practice before you will start to make real money but it is definitely worth it if you put in the effort as this beats any job in the world hands down no matter how well paid or challenging it might be! How much does it cost?
Forex brokers usually charge around $100 per month regardless of whether you’re trading 1 cent lots or 50 cent lots which make trading affordable regardless of your current account balance.
How do I start?
There are hundreds of forex brokers out there and not all of them provide the same services or payouts but we recommend starting off by opening an account with FxPro because they offer low spreads and good customer service (plus their website is pretty easy to navigate).
How much money should I deposit into my account?
In order for a broker to process any trades on your behalf, he will need enough money in his system so if you deposit $100 then you can only trade up to $100 worth of currency pairs during a single transaction.
In summary, trading forex is quite easy and there are many online resources available to teach you how to do it properly but beginners should take their time to research and learn about how this market works before they start using real money. How much will I make?
That depends entirely on the trader but if everything goes well, you can expect a healthy profit within just a few hours which is why trading was such an exciting pastime (and still is) for amateur and professional traders alike. How long does it take?
Forex brokers usually process applications pretty fast so you shouldn’t have to wait more than a few days before your account is up and running.