Forex trading (Foreign Exchange Market) is the playground of the massive international foreign exchange traders. Plenty of money is shuffled back and forth virtually here with daily sales of over five trillion dollars. The (pecuniary) largest marketplace in the world!
If you would like to play here, you should start carefully. You should take these 6 steps to get started using a proven method so the risk doesn’t get too great at the beginning.
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Forex & CFDs are investments with leverage and, in addition to the resulting opportunities, involve a substantial risk of loss. The losses can even exceed the initial investment. If you hold the trades too long, you’ll be required to form additional payments.
Forex trading is characterized by cryptic terms, the meaning of which you must to know for Forex trading.
In Europe, the markets are open between 8 a.m. and 6 p.m. CET, in the USA from 2 p.m. to 9 p.m. CET and in Tokyo, Singapore and Hong Kong from 1 a.m. to 9 a.m. CET.
So, equipped you go searching for a broker and in the first step you open a trading demo account. The subsequent criteria help to find a reputable and fair broker:
Each broker has its own interface for Forex trading. Once you have opened the free demo account, the test phase begins. Implement all the functions, put your own strategy to the test.
The easiest way to start is once you first try out proven trading strategies and tips for beginners and study the results.
Well-known tips for beginners are for example:
The dollar, euro and pound are the popular “entry currencies”. The fluctuations are much smaller than those of exotic currencies. Many market participants guarantee continuous trading, which is vital when you need to get out quickly. Your starting capital should be low.
As with all financial investments, currency trades should also be spread. With the demo account, you’ll still put everything on one card. Later, no over 15 to 20 percent should be placed on a position.
In order to not be stopped out with every price twitch, the margin should allow a certain amount of leeway. Here the demo account helps to determine the correct amount for your own trading currencies.
When starting live trading, you should have developed your own trading strategy, which you’ve got checked for suitability in the demo account.
Well-known trading strategies are often found on the trading strategy page, see here.
One approach is to think in scenarios: If this happens in the world, that’s likely to happen to the currency pair XY. Write down and test each. This is often called fundamental analysis.
If you would like to use technical signals for your strategy, you’ll find a range of technical investment strategies on the page (e.g. at forexcanada.ca/forex-trading-strategies/).
These technical signals can be checked for effectiveness using backtesting in the demo account. Plenty of work, but the reward may be a feeling for the price development. In the end, this may differentiate the good trader from the losing private investor.