You have just bought a new laptop and have got a faster WIFI connection. Now, are you thinking of what to do? Watch some new YouTube videos? Too boring! Play some video games? Not worth it.
What about doing some Forex trading? Sounds cool right?
Forex is a place where traders buy or sell currency pairs to earn profit. Forex or foreign exchange is the largest, decentralized financial market in the world. Shocked? Well, yes. Forex is a market many times larger than the stock market. The stock market barely covers billions of dollars per day, while Forex deals with trillions of dollars worth of transactions each day.
That’s not the end! The Forex market is highly liquid compared to the stock market and you can enjoy the facility of trading 24 hours a day! The stock market doesn’t give you that option and even charges you higher transaction fees then Forex.
You don’t need adegree to start trading. All you need to do is some good market research and implementgood money management. If you are confident that you have these qualities, then you are good to go.
But if you are still learning, here are some guidelines that you can follow as you start trading.
Step 1: own a good internet connection
The biggest reason for the Forex market being highly liquid is that most trading is done online. So, it is very important to have a strong internet connection 24/7 free from any potential disruption. The Forex market tends to fluctuate very frequently and rapidly. You never know when is a good time for you to buy or sell your currencies. If you are not connected to the web when the exchange rates are fluctuating, you can potentially lose your money, and eventually, you might even lose your entire trading account. Since you don’t want that to happen, be cautious and use a good internet connection. It can be a WIFI connection, broadband, or mobile data. You have many options. Choose the best one for you.
Step 2: get yourself a broker or a dealer
In Forex, all trading is done via a broker or through a dealer. Now, you must be wondering about what a broker does.
A broker acts as a middleman in any exchange. Let’s say, that you want to buy some meat. You definitely won’t go to the farm to buy a cow, right? Instead, you would go to the nearest butcher. Here meat is bought from farmers and then the butcher sells it to his or her customers. That’s exactly how a broker works in theinvestment industry.
The careful selection of brokers can help you save some money by reducing the transaction costs and commission fees.By selecting a good broker you can minimize your options trading costs. Those who don’t know how to option trade, can learn the basics using the free resources on the internet.
Step 3: don’t jump straight into trading
This is a common mistake that newcomers often make. It is highly discouraged to start trading right after opening a trading account.
Instead of doing that, specialists advise that you open a demo account where you can practice with other new traders and learn to speculate about the market before you start doing live trading.
There are various online demo account options and you should choose the one that fits your personality. Opening a demo account also reduces your chances of making losses when you start out.
Step 4: Forex trading platform
A trading platform is some software designed to meet the needs of traders while trading. These platforms are generally provided by the brokers you deal with and helps traders to get the best experience when trading.
A Forex trading platform is more or less like gaming software. If you want access to play a game, you must download the online software or app first. Then, you can enjoy playing your game. In the same way, the trading platform enables you to explore the trading market and do your trading.
Step 5: start your trade
Now that you have a good internet connection, a broker, and access to trading platform and you have practiced enough with your demo account, it’s time for you to start trading.
Remember, you cannot expect to make a profit from the very beginning. So, investing a big amount of money is quite a risk. Start small and calculate your risk-reward ratio.
Focus on one particular reward at a time and don’t get distracted by petty offers. You can even follow the strategies of a successful trader. Do anything that works for you. But, make sure to stay on the right track! You will find your destination for sure.