Forex Trading: Where Should I Start
Want to be like one of those respected Wall Street magnates, who coin money like hotcakes? There is no need to go to New York in hopes to scoop a large profit. These days you can knock up a fortune in the comfort of your home. Foreign exchange market or as it is simply called Forex may become your winning ticket to prosperous and wealthy life.
If you have been cherishing the idea of making money on the currency market for a long time but the question “Where should I start” doesn’t let you do it, then you have come to the right place.
Learn the rules of the game
If on deciding to trade on Forex you are already counting money in your thought, slow down. Trading is an art that can be mastered only when successive moves have been taking. So, first goes the theory and then practice. To feel in element in the harsh world of big business, you should know how money “talks.”
The essence of Forex trading is in selling one currency that is called base currency and buying another one, quote currency. The difference between the value of the two currencies makes up your profit. Sounds easy? Well, that is just the beginning.
To carry out financial transactions successfully you should know the “weather forecast” on the market or simply put, exchange rate. Here is where the prices for currencies are being set. Having made yourself familiar with exchange rate, you can decide on either taking long position which means that you buy base currency and sell quote one or short position (vice versa).
Trading on Forex is like surfing, where you should catch the right wave though in exchange market this is about a bid price at which you sell quote currency and ask price at which you buy currency respectively.
Once you learn basic rules of trading in Forex you can pass over to the next stage.
Find a broker
Choosing a broker is a crucial point in market trading, since this person or company will run your buy/sell errands. Every broker employs particular software meant for bidding. So, when hiring a dealer, pay attention to reliability and safety of the program he/she uses.
It goes without saying that a broker doesn’t work for free, earning commission for the services he/she provides. The broker cashes on the change between the rate of currencies. When there are wide fluctuations in exchange, brokers try to make them still bigger for a larger profit. Thus, particularly this question should be distinctly preconditioned when you employ a broker.
Have a trial
Once you have a broker, you can give his software a try. For this, you will need to create a demo account. Don’t skip this vital stage if you are a beginner, since virtual account offers you a chance to test various trading platforms and strategies and decide which one suits you best.
Demo account is an opportunity to make mistakes without financial losses since there is virtual money you are trading with. So, don’t be afraid to explore every avenue of the demo account. Remember, the man who never made a mistake, never made anything.
Finally, versed in trading, with a reliable and experienced broker by your side, you are ready to pull an anchor. Though while trading on real exchange market you may also come across some pitfalls.
To avoid them, you should undertake sustainable analysis of the market, investigating data that shows all currency movements. Based on this information, you can predict exchange rate and use this knowledge to work for your benefit.
Trading on Forex, don’t leave the country’s economic situation out of account putting your knowledge about it together with technical analysis of the exchange market. Skillful application of these two methods will prevent you from leaping in the dark and help you to avoid material losses.
All in all, trading on Forex may seem a great challenge. In fact, this is an easy-to-conquer summit that knocks under those who patiently and insistently examine its surroundings.