How to Start Forex Trading?
Forex is a decentralized global foreign exchange market. Worldwide, it is the largest and most highly liquid market (The whole truth about forex). The average annual trading volume here is over $5 trillion. None of the stock exchanges can compare to Forex in terms of profitability. For this reason many traders sooner or later become interested in this market.
However, very often people come here who know nothing about forex trading. And the result is always the same - deposits are lost one after another, but to prevent this, you need only a small amount of time to study the market (forex trading training). In this case it will be possible to start trading correctly and not to make many mistakes.
Where do I start in forex trading?
So, if you decided to earn in the financial market, it's time to become a trader. A quite logical question arises - where to start?
To begin with, think carefully. Forex is not like a casino, where by correctly guessing a combination, you can make money, Forex is not a bank, where interest will accumulate without any effort. Trading, like any other activity, requires knowledge, skill and patience. While trading on Forex one should not stop learning and improving. One of the most important moments is the ability to make decisions, objectively assessing all the pros and cons of the market situation.
If you have made a firm decision to trade, then you should get the necessary knowledge. Unfortunately, you will not need any skills from everyday life here. The trading terminal has a lot of obscure names, the market analysis is very diverse and it becomes difficult to understand where to start.
As soon as the necessary minimum knowledge is obtained, it is possible to start trading. As a rule, forex services are provided by brokerage companies, banks and dealing centers. The firm, to which the client has the greatest confidence, should be chosen. This stage is very responsible, as there is only one trader, but there are many brokerage companies. About how to find Forex brokerLet's talk about it in more detail.
How to choose a forex broker?
The choice of a brokerage company should be based on a number of criteria.
- The first criterion is the time of existence. The longer the company operates on the market, the more reliable it will be. The rapid development of the forex industry took place in 1997 - 1998. That was the time when the most reliable brokers appeared. But there are also younger firms, which also have a good reputation. For example, the company AMarkets (site), which has been in business since 2007, and over the years it has become firmly established in the industry.
- The second criterion is the number of clients and how they feel about the broker. Thanks to this indicator you can assess the credibility of the company. For example, AMarkets broker is among the top 3 companies with the highest index of customer success.
- Next comes the spread. As we know, brokers earn on spreads and commissions, in other words, on the difference between the buying price of a currency and the selling price. The spread does not have a constant value. It can widen and narrow, but there are certain values.
- The next task when choosing a dealing center is to find a company with the minimum spread on the main trading instruments. The key currency pairs are those instruments with the lowest spread. They are also called "major" pairs.
- The sale of currency is carried out by certain volumes - lots. The smaller the lot, the less money is needed to open a position. The risk and profitability in this case, of course, is also low. The smallest lot that is available is "0.01" - 1000 units of currency. It is recommended to stay away from brokers, who do not allow trading with minimal lots, otherwise it is highly probable that your deposit will quickly migrate to the pocket of such a broker.
- Leverage. The higher the leverage, the more risky operations can be performed on the exchange. You can disregard leverage if you plan a conservative type of trading. Because of trading with leverage it is possible to lose the whole deposit, however, you will not get into debts, because as soon as your losses become critical, but will remain within the limits of your deposit, all transactions will be automatically closed.
- Another indicator when choosing a broker is the number of instruments that the broker allows you to trade. The more instruments, the more varied the trade will be. There are assets with strong volatility, there are more stable but slower ones.
What information about forex and where to learn?
For novice traders, trading on the financial market appears as a difficult and incomprehensible process. Many people think that there is no sense to get into it if there is no corresponding education. Of course, if there is a financial education, it is a definite plus, which can become a good support for a trader, but if there is no education, it does not mean that there is no sense to try your forces in this sphere.
You don't have to know all the secrets of the market to make good money. If you have an analytical mind and are hard-working, you can achieve success here as well. You need to learn the basic factors which influence the exchange rates and the basics of trading, as well as know the principles of analysis technical and fundamental character. Learning how to trade is not difficult. Almost all brokers, including the broker AMarkets, provide their clients with training materials, hold webinars and offer useful analytical materials. Moreover, there is a lot of freely available information on various topics on the Internet.
How much money do I need to start trading forex?
Many beginners wonder how much to start trading on forex. Let us note that it is wrong to think that the lower the amount of the minimum deposit, the better. Most beginners look for a broker who offers to start with 10 or 5 dollars, sometimes even with 1$. For a beginner it is a good opportunity to try your forces, and in case of failure, get off with small losses. Nevertheless, in order to start earning on Forex it is better to open an account with $500 or more. For example, having 2000 dollars and risking no more than 2% of the account amount on each transaction you can earn more than 40 dollars per day.
The larger the amount on the deposit, the lower the risk. So those who start trading with $10 are likely to lose it quickly, except if it's a cent account where you operate small amounts that feel like large ones. If your starting capital is $250-500, then risking no more than 1% on each trade, you can earn an average of $5-10 a day. Within a year this way you can build up your income to several thousand dollars and start more serious trading.
So, we have tried to tell you in detail about how to make your first steps in the foreign exchange market. Anyone who is interested in forex trading should try their hand here and not be afraid of losses.