If you've never traded Forex before, the idea might be daunting. But you can start Forex trading today, with no prior experience. Yes, the internet has made it easy. And with platforms readily available online, nothing is standing in your way.
Here is what you need to know to start Forex trading.
You need a broker through which to trade Forex. The broker processes all of your trades, making it possible for you to access the markets. There are two important considerations when choosing a broker:
- Regulations: Financial trading is a regulated activity in almost every country. This is especially so in financial centers such as the UK, USA, Japan, etc. You should make sure to choose a broker with a government license. This ensures that you're protected in the case that something goes wrong.
- Order execution: Find out what type of model to use. The two options are brokers with a dealing desk and brokers without. A dealing desk simply means that your money is not actually traded. It is kept by the broker who loses that money if you lose, and pays you out his own if you win. Without a dealing desk, the order is done straight through the broker.
To start Forex trading you need to select a trading account. A trading account is similar to a regular bank account. The difference is that you can use these funds to trade on the financial market. Brokers will offer a variety of trading accounts to choose from. Pay attention to minimum deposits, leverage, financial instruments available, and charts and analyses provided.
As you become more attuned to the way the Forex market works, you'll be able to make more informed decisions on what will serve you best in future.
For better or for worse, Forex brokers offer higher leverage than any other. Leverage allows you to trade with far more profit potential than the actual amount you are trading. In other words, if you are offered leverage of 1:100, it means that you can trade $1 and make $100. However, it also means you can lose an equal amount, and not just what you traded.
No matter what, when you start Forex trading you should have trading capital set aside. This means that you trade with funds you can afford to lose. Because ultimately you probably will face failure before going on to make big money.
If you're trading with the money you need for day-to-day living, you will inevitably crumble under the pressure, making bad decisions when things start going wrong.
Finally, you need to learn to use Forex trading software. The trading platform is what creates contact with the broker, and will usually be offered by the brokers. The industry standard is MetaTrader 4, and is offered by Admiral Markets, as well as most other brokers. It is easy to use and has complete functionality.
Start Forex trading today
Forex trading is so accessible nowadays that there are few reasons not to start Forex trading. Just make sure that you are responsible, and only trade with money you can afford to lose.