How to trade Forex?
Step 1:
Research the best ways to invest
Forex is the biggest financial market in the world. It’s bigger than the US stock market because the daily turnover has now exceeded 4 trillion US dollars. First, understand that as a retail investor, you can’t move the market; the banks trade in multimillions, and most retail traders won’t be doing so.
Step 2:
Consult a trusted broker
Trade with a broker who will not deal against your trades with human dealers or electronically. Most retail FX brokers take the other side of your trade because they are the market makers. The Forex market is big enough, and regulations are tight enough that most brokers are playing by the rules. You can search for it on many websites.
Step 3:
Understand world currencies and their fluctuations
Currencies are traded in pairs. Choose a single pair to learn how to trade and stick to it until you get to know the pair. The most heavily traded pair is the EUR/USD, and the pair that many traders like because of its high volatility is the GBP/JPY. Also, it’s beneficial to learn exchange rates.
Step 4:
Get a charting package that allows you to see the current price as it happens and make a technical analysis.
Almost every broker will give you free charts, like the popular MetaTrader 4 software.
Step 5:
Your next step is to decide which forex trading platform to use.
Forex trading, in simple words, means foreign currency exchange trading. By platform, we mean how your computer screen looks when you are trading, how the currency pair you bought or sold is doing (is it gaining or losing), how to keep track of your funds, etc.
Step 6:
Learn a system that gives you an indication of when to enter and when to exit trades.
Following the market’s price action is a popular method that professional traders have been using for over a hundred years before charts, candlesticks, and indicators were invented.
Step 7:
Start using a demo account; do not use real money.
Start by testing your strategies on a demo account, and once you are confident and making good trades, go live and trade with your real capital. Always trade with money you can afford to lose, and learn to manage the emotions of risking, losing, and gaining money.
Step 8:
Enroll in a financial education course. You can find free sources to improve your trading knowledge.
You can also find free information on different trading styles on the internet. Just beware of the source of the information you find.
