How To Start Forex Trading?
Forex is a decentralized global currency market. It is the largest and highly liquid market in the world (full truth about Forex). The average annual trading volume is more than $ 5 trillion here. None of the stock exchanges can be compared with Forex in terms of profitability. For this reason many traders begin to be interested in this market sooner or later.
However, people, who know nothing about Forex trading, come here very often. The result is always the same – they lose their deposits one by one. To prevent it you need a short period of time to learn the market. In such a case, you will be able to start trading correctly and do not make many mistakes.
Where to start Forex trading?
Well, if you decide to make money in the financial market, it’s time to become a trader. There is quite a logical question – where do I start?
For a start, you should think carefully. Forex is not like a casino, where you can guess a correct combination and earn money; Forex is not a bank where the interests will be accumulated without any effort. Like any other activity, trading requires knowledge, skills and patience. When trading Forex, you need to keep learning and improving. One of the most important points is the ability to make decisions, objectively assessing all the pluses and minuses of the market situation.
If you make a firm decision to trade, you should get the necessary knowledge. Unfortunately, skills from everyday life are not useful here. The trading terminal contains a lot of obscure terms, market analysis is very diverse, and it becomes difficult to understand where to start.
As soon as the necessary minimum knowledge is obtained, you can start trading. As a rule, Forex services are provided by brokerage companies, banks and dealing centers. You should choose the company which the clients trust more than others. This stage is very important, because there are a plenty of brokerage companies. Let us discuss in details how to find a reliable Forex broker.
How to choose a broker?
The choice of a trading firm shall be executed by a number of criteria.
- The first criterion is a period of work. The longer the company operates in the market, the more reliable it will be. The rapid development of the Forex industry was in the period form 1997 till 1998. Just at this time, the most reliable brokers began their work. But there are also younger companies that also have a good reputation. For example, the company AMarkets (website), which has been operating since 2007 and over the years, has gained a foothold in the industry.
- The second criterion is the number of clients and their reviews about the broker. Thanks to this indicator, you can assess prestige of the company. For example, broker Amarkets is in the top 3 companies with the highest rate of customer success.
- The next is a spread. As we know, brokers earn on spreads and commissions, in other words, on the difference between buying price and selling price of the currency. The spread is not a constant value. It can expand and narrow, but there are some certain values.
- Choosing a dealing center you should find a company with a minimum spread on the main trading instruments. The key currency pairs are the ones with the lowest spread. Otherwise, they are called «major» pairs.
- Sale of currency is carried out in certain volumes – lots. The smaller the lot, the less money will be required to open a position. In this case the risk and rate of return are certainly low. The minimum available lot is «0.01» — 1000 currency units. It is advisable to stay away from those brokers who do not allow you to trade the minimum lots on the exchange; otherwise, it is likely that your deposit will quickly move into the pocket of such a broker.
- Leverage. The greater the leverage, the more risky operations can be performed on the exchange. The leverage can be ignored if a conservative type of trading is planned. Because of trading with the credit leverage, you can lose the entire deposit, but you will not get into debt, because as soon as your losses become critical, but remain within your deposit, all transactions will be closed automatically.
- When choosing a broker, another indicator is the number of instruments that the broker allows to trade. The more instruments, the more diverse the trade will be. There are assets with strong volatility, and, at the same time, there are more stable, but slow.
What information on Forex is supposed to be studied and where?
In the financial market, newcomers see the trading as a difficult and obscure process. Many people think that it makes no sense to get involved into it without an appropriate education. Certainly, it is a benefit, if you have a financial education, but even without it, you can try your hand in this area.
To make good money in the market, it is not necessary to know all its secrets. If you have an analytical mind and diligence, you can achieve success here. It is necessary to learn the main factors that influence exchange rates and the basis of trade, as well as to know on what principles the technical and fundamental analysis is carried out. It is not difficult to learn the trading. Almost all brokers, including the broker AMarkets, provide their clients with training materials, hold the webinars, and offer useful analytical materials. Moreover, on the Internet there is a lot of information on various topics in the public domain.
What sum does one need to start Forex trading?
Many newcomers wonder, how much money do they need to start trading on Forex. It should be noted that you will be wrong thinking that the lower is the minimum deposit, the better. The majority of newcomers are looking for a broker that offers to start with 5 or 10 dollars, and sometimes even 1$. For the novice player is a good opportunity to try their hand, and, in case of failure, get off with a small loss. However, to start earning on Forex, it is better to open an account for $500 and more. For example, if you have $2000 and risk no more than 2% of the account on each operation, you can earn more than $40 per day.
The higher the amount on deposit is, the less risk. If you start trading with $ 10, you likely lose them quickly, if it’s not a cent account, where you can operate on small amounts that feel like large ones. If the starting capital is 250-500 dollars and risk on each operation is no more than 1%, on average, you can earn 5-10 dollars a day. During the year, you can increase your income to several thousand dollars and start a more serious trade.
So, we have given you the details how to make the first steps in the foreign exchange market. Anyone interested in Forex trading should try his hand in here and not be afraid of losses.