If you are new to the currency market and aiming to become a seasoned forex trader smartly and securely, here are some critical steps to take.
1、Understand Forex basics
As a forex trading beginner, it’s important to understand the basics of the forex market. These fundamentals will help your understanding of the key aspects of the foreign exchange market and ultimately help you to make informed decisions when currency trading.
Don’t worry! You will not have to buy a dictionary and learn all by heart. As you start reading educational content related to forex exchange, you will naturally acquire these terms. Let’s just mention the most used and most important ones: currency, pairs , trading margin, long term and short term position, a spread, a bid, and ask price. Learn with Dr. Lambeau Forex basics.
2、Decide on currency pairs you want to trade
As a forex trader, you are going to trade in a currency pair.
The standard view of a currency pair is:
Base currency/Quote currency
A trade operation means that the trader sells or buys the base currency against the quote currency.
The base currency is the one on the left – it is the currency that you sell/buy. The quote currency is the one to the right – it expresses the price of the base currency.
For example, look at the EUR/USD (Euro vs US Dollar) currency pair:
EUR is the euro, base currency
USD is the American dollar, quote currency
The current exchange rate of EUR/USD is 1.1270. which means 1 euro costs 1.1270 US dollars.
3、Research forex brokers
The forex broker you choose is at the core of your trading success. You can select a reliable and honest forex broker, but there are several things to be aware of first. First of all, go for the regulated brokers who have clearly put their contact details on their websites, such as their phone number, email address, and headquarters address.
Then, be sure they have customer service available, such as email support or live chat. There must also be a way to communicate in your native language, so multilingual customer support is necessary. Lookup for the trading platforms they offer, such as mobile platforms, web-based platforms, or both. Check what the range of their trading instruments is. If it includes stocks, securities, cryptos, all the better. It proves they have a larger number of different clients.
Regarding trading conditions, also checks what is the minimum deposit and also if they are offering the possibility to trade on demo accounts. It’s crucial, assuming that you come into this as a newbie trader.
4. Personal or managed account?
When opening an account, you will have a choice to trade personally or to delegate your trading to the account manager. It may be better to start with an account manager before you are sure enough in your trading skills. It’s also the best option if you haven’t enough time to dedicate to forex. But stay away from those brokers who are offering unrealistic returns in profits. That implies that they are taking a considerable risk to achieve a high investment return.
5. Practice with a demo account
Just like in sports, half of success is achieved on the practice field. After analysing the market with charts of historical data of the currencies you want to trade, start practicing with a demo account. That way you will acquire the trading reflex and be able to manage funds on your own when you decide to invest the real money. Using the perks of demo trading will allow you to feel the real market and hone your trading skills.
Once you’ve understood the basics of forex, try putting your new-found knowledge into practice with a demo account below. You can test forex strategies and tips, and start to create a trading plan to follow. Once you’re comfortable with a strategy using the demo account, including managing your risk, and are familiar with the trading platform, you can open a live account to trade on forex for real.