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Knowledgebase: Frequently Asked Questions
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How to trade Forex?
Posted by Homi .M on 18 September 2012 05:58 PM
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Step 1: Research the best ways to invest. Forex is the biggest financial market in the world. It's bigger than the US stock market, because the daily turnover has now exceeded 4 trillion US dollars. First understand that you, the retail investor, are not going to move the market, the banks trade in multimillions, most retail traders won't be doing so. Step 2: Consult a trusted broker. You need to trade through a broker who will not deal against your trades with human dealers or electronically. Most retail FX brokers take the other side of your trade because they are the market makers. The Forex market has got big enough and regulations have got tight enough that most brokers are playing by the rules. You can search about it in many websites. Step 3:Understand world currency and its fluctuations. Currencies are traded in pairs. Choose a single pair to learn how to trade and stick to it until you get to know the personality of the pair. The most heavily traded pair is the EUR/USD and the pair that many traders like because of high volatility is the GBP/JPY. Learn Exchange Rates. Step 4: Get a charting package which allows you to see the current price as it happens and make technical analysis. Almost every broker will give you free charts like the popular MetaTrader 4 software. Step 5:Your next Step is to decide which Forex trading platform to use. For beginners let me say that by Forex trading, means foreign currency exchange trading. When I say a platform I mean how your computer screen looks when you will be trading - the current buy and sell prices of the various currency pairs, how the currency pair which you bought or sold is doing (is it gaining or losing), how to keep track of your funds, etc. Step 6:Learn a system which gives you an indication of when to enter and when to exit trades. Following the market's price action is a popular method that professional traders have been using for over a hundred years before charts, candlesticks, indicators inception. Step 7:Start using a demo account and not real money.When you are confident and consistently making good trades, go live. When you go live, trade with money you can afford to lose and learn to manage the emotion of risking and losing or gaining money. Step 8:Enroll in a financial education course. You can find free education from most brokers on trading basics and you can find free information on almost any trading style on the internet. Just beware of the source of the information you find. | |
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