Forex is the rave of the moment, and it is not hard to see why it is such a prominent market among traders. Thus, many newbies want to make money through Forex but have no idea how to begin. Worry no more; this step-by-step guide will show you all you need to start.
How to commence forex trading
Navigating the Forex waters could be a herculean task, especially for a first-timer. So, we’ve broken the process into simple steps to help you commence your journey.
Step 1: Choose how you would like to buy and sell forex
Forex trading majorly takes place between banks and economic institutions, which trade (buy and sell) vast amounts of currency daily. But for an individual who doesn’t have such a fortune, there are other ways to get started; forex CDs or buying and selling forex via a broker.
The Forex CFD
It is an arrangement whereby a trader agrees to exchange the price difference of a EUR/USD or another currency duo immediately after an investor opens a position to when they close it. So, the trader will open a long position and make a profit if the forex position increases. However, if there is a price drop, the trader will make a loss.
Using a Broker for FX Trading
It works similarly to CFD trading. The trader usually speculates on the variation in the price of currency duos, e.g. EUR/USD, without acquiring the currency’s ownership. A trader doesn’t take all the risk and, as a result, has limited access to market dealings. using a broker works similarly as it does with CFD trading. For starter traders, it is highly recommended to choose regulated Forex brokers for beginners.
Step 2: Learning the basics of the market
It is essential to learn how the market operates. Rather than trading on the centralized exchange criterion and rules, several bank chains trade forex over the counter, thereby allowing decentralization. They work as merchants and list a fixed price by which investors can buy their preferred currency pair, evading centralized exchange.
Step 3: Forex’s account creation
You will need an account with a leveraged trading provider to begin trading. You can quickly open an account and not add funds until you are acquainted with it or ready to place your first trade.
Step 4: Create your trading strategy
Creating a simple trading technique is essential if you are a newbie. It helps stabilize your emotions, sieve them out of your decision-making, and build a solid structure for opening and closing your positions. Also, you can add a forex trading strategy that governs how you move and find opportunities in the FX market.
After selecting your preferred trading technique, apply it. Use your technical analysis tools on the trade of choice, proceed from there, and review it frequently.
Step 5: Choose a trading platform
Several trading platforms offer smart and seamless ways to buy and sell Forex. Ranging from your smartphone browser to mobile apps to sophisticated trading platforms owned by companies and individuals. Each platform will be customized to fit your trading technique, preference, proficiency, and risk control techniques.
Step 6: Stay alert and trade
After deciding on your preferred medium for trading, commence trading. The preferred currency deal ticket and price will be automatically listed upon trade opening. Also, you can decide the size of your position, go big, or minimize risks once it reaches a peak.