There was a day when no one but big business had access to the forex market. The dawn of online forex trading changed all of that. Since that time, forex has been becoming more and more accessible to new entrants, but it’s still far from clear or easy. If you are interesting in exploring this opportunity, here are a few pointers to get you started.
1. Take the time to understand before trading.
This is by far the most common problem for new investors. If you can’t explain to your brother-in-law what exactly you hope to do, how it works, and why you think you can make money, you aren’t ready yet. In this respect, buying and holding stocks is far more simple and transparent. Forex isn’t for you if you aren’t ready to get an education in complex financial systems.
For starters, investigate any terms you might not know like currency pairs, pips, scalping, swing trading, Fibonacci analysis, and more. Most of this information is available online at sites such as Wikipedia.
2. Pick a good broker.
There was a day when computer users experienced everything through a monochrome monitor. That was their only window in the world of computers. In the same way, a broker is your window into the world of forex. Pick a bad broker, and your entire experience will be bad. It pays to investigate by looking at forex broker ratings. See what other people think; compare between multiple brokers yourself; ask the hard questions. A single factor like wide spreads (the difference between what you pay and what you get), can make a strategy completely impossible.
Of course, the reality is that brokers need to make money too. If your broker is going to stay open, he’ll need to include some type of charge. But a number of “brokers” maintain trading desks that trade against their own customers, and others use practices that are essentially fraudulent. Never open an account with any brokerage without carefully reviewing and verifying their legitimacy.
3. Be willing to pay for a forex education.
You can get away with scrimping on some things. But forex education will help you establish a personal strategy and good tradings habits from the beginning. Unfortunately, the sudden expansion of the forex marketplace has caused a flood of educational offerings—some of them quite unhelpful. This points to the next tip.
4. Find someone you can trust who is an experienced trader.
Your best bet for a smooth entrance into this investment style is to find a good mentor. There’s a huge value in having someone to go to with your questions. This is also the best way to choose a broker or an education program.
5. Start with a demo account.
Too few people realize that demo accounts are available for free at most brokerages. These systems give you the opportunity to practice without actually putting any money on the line. This means that you can find out whether forex trading really is for you. Once you can consistently produce positive results over a period of time, you are probably ready to get started in forex.
Too many people have entered the forex market without understanding these basic foundations and historical currency rates so in turn lost their money. Their conclusion is usually that the entire system is a scam. But following a careful and deliberate method, you can get started and be quite successful.