How to start trading Forex?
Forex trading is undoubtedly the fastest way to earn profits by trading, even when compared to the stock market. But, it is also a mere fact that trading in Forex can cause more losses than the stock market. Moreover, the trends in the currency pairs are more unpredictable than the stocks and the forecast may reverse fire if not analyzed well.
If you are interested in Forex Trading, read on and your quest ends here, as you are going to return with complete knowledge on trading Forex as a beginner.
Yes, here is the complete guide of how to start trading Forex and be safe from the losses that most novices miss. So, without seconds late, let’s begin!
What is Forex Trading?
Forex or Foreign Exchange Trading is the buying or selling of different currencies i.e. in currency pairs. The exchange can be done using a specific trading platform that also shows the present price, charts for the ongoing trend, and also the tools to forecast the possible future trend.
By using those tools and the platform, one can trade in any chosen currency pair 24 hours a day. The forex market is run by a global network of banks without any central interruptions between buyers and sellers, i.e. decentralized exchange.
So, you get the exact price agreed with the other party without any cuttings and the same follows for the loss as well.
The basics of currency trading (Key Elements)
Some essential elements that make Forex Trading work for the buyers and sellers are as follows
1. Currency Pairs
Forex trading takes place in currency pairs that the trader chose to trade with. For instance, if you choose EUR/USD, you are either buying the dollar and selling Euro-based or vice versa based on the forecast of profit or loss trend.
You can find dozens of different currencies and different pairs of them on your chosen platform. But, the common currency in most of the currency pairs is the dollar as it is the most traded currency in the world.
Forex scams are a very real thing that people may find themselves exposed to in their pursuit of wealth. There are many ways that someone can get scammed out of their money, and the more they know the less likely it is for them to be taken advantage of. Click this to know how to be safe as an investor.
Pip or “percentage in point” is nothing but a market convention for every small to big price movement in the Forex Market. For instance, if a currency pair’s price is moved from 1.32421 to 1.32431, the change is 1 pip.
There will be a certain price for buying and selling for every currency pair which is quoted by the global market. Well, the difference between the buy and sell price is called a spread.
Lots are basically the batches that are more of a standardized way of representing the trading volumes in forex markets.
Leverage represents the allowance of trading on larger amounts than the capital you actually have or need to trade. Although it can potentially provide more gains, it also magnifies the losses to a great extent.
Drawdowns are the term used for cumulative losses that one may come across while forex trading.
Steps to start Forex Trading
- Start surfing on the Internet
Begin with getting a fast and stable internet connection to avoid disruptions as trading is all about quick actions based on the changing trends. Even a few seconds can convert your profit to loss, so you should never compromise on internet connectivity.
- Find a reputed forex broker
Finding authorized forex brokers online is quite a challenging task, especially with a lot of options around. But you could get the best one by considering essential factors like the number of tools available, efficiency, reliability, and most importantly, the reviews of its users in the feedback section.
- Open the trading account
Opening the trading account is now easier than ever as all you need to do is follow the instructions provided in the chosen platform.
- Test the demo account and explore the available features
Start with the demo account with the money that the platform provides to practice trades, but in the same real-time price changes. By doing this you get to explore all the available options in your platform.
- Make the initial deposit and place trade
Once you gain trust in the platform’s optimization, reliability and performance, you can now make your initial deposit with minimum balance and start using your strategy. Don’t forget about the markets.com bonus that many sites provide.
That’s it you have made your first forex trade. But, to avoid losses and gain consistent profit, you need to frame a strategy and stik to it based on the ongoing trend after proper forecasting.