Getting Started with Forex
For many people that want to trade global financial assets online, forex is usually their first stop.
With over $6 trillion traded daily, forex is the largest financial market in the world. It is highly liquid, and open round the clock Monday through to Friday. Previously accessible only to institutions and high net worth individuals, technology has now democratized the forex market. There are very low barriers to entry for any retail investor that wishes to get a slice of the forex pie.
Here is a quick guide to getting started with Forex:
Choose a Forex Broker
This is your first decision in your forex adventure, and it must never be made in haste. A broker is essentially your trading partner, and you must select one that will be invested in your success as much as yourself. A good broker must be highly regulated. Regulation ensures your safety and security, as well as guarantees transparent trading services.
A good broker will also provide a reliable trading platform that is user-friendly, stable, packed with professional tools and resources and gives access to a variety of global financial assets. Examples include the popular MT5 and MT4 trading platform. Other important broker considerations include safe and convenient payment methods, responsive human customer service, flexible account types, comprehensive educational resources, as well as trading costs.
Open a Demo Account
Most brokers will offer you the option of opening a free demo account after you sign up with them. A demo account has the full capabilities and functionalities of a real account, but it is funded with virtual funds. This provides you with access to the global forex market with no risk of losing any funds.
But while this can be referred to as ‘play money,’ it is important to take demo trading seriously. Use demo trading objectively to try out strategies as well as to understand how to navigate all the intricate features of your broker’s trading platform. It is important to only consider shifting to a live trading account after you have proven to yourself beyond doubt that you are able to consistently achieve trading success with your trading strategy.
It is also important to note that demo accounts are not just for beginners. Even after transitioning to a real account, you can retain your demo account and continue to use it as a learning tool where you can develop, tweak or optimize new or existing strategies before implementing them on a real account.
Open a Real Account
After successful demo trading, it is then time to start trading with real money for real profits. This is often not an easy transition for many new traders. With a real account, real money is always on the line. This fact can interfere with the objective trading activity of many beginners. As such, it is important to start with a small capital amount and work your way up to your ideal amount.
Some brokers have flexible account types tailored for retail traders. Such accounts can feature flexible leverage levels or even small lot sizes. For new traders, it is always important to not take too many risks in the beginning. On a real account, real losses can take a toll on you, and this can make you vulnerable to even more risks. Many traders fail at forex because they fail to master their trading psychology. Risk management is a huge component of your trading psychology and mastering it can help you build the mental edge required for forex trading success.
Forex is a fast and dynamic market. Sustainable success can only be achieved if you keep learning and improving your trading knowledge, skill, technique, and experience. There are always new strategies to learn, new asset types to trade, as well as news releases and information to track.
There are several sources of forex educational materials. You can also utilize your broker’s resources to continually upgrade yourself. A good forex broker will provide comprehensive and relevant educational materials that you can access at any given time. Some brokers also have active experts that provide market commentary, reviews, and analysis periodically.
You can also connect with fellow traders in different social investing circles and share trading knowledge and insights. Forex trading may be easily accessible, but it is not simple. The only way to guarantee survival in the high-risk/high-reward market is with constant learning. Education is the safest investment you can make in the forex market.
Forex is an exciting market for many new retail investors. But you can only experience joy if you get started the right way. It is vital to sign up with a regulated broker and perform sufficient trading on a demo account before transitioning to a real account. Even on a real account, it is important to start small and commit to constant learning. Success is achievable in forex trading, but like in every facet of life, you must put in the required work and effort.