Forex trading is a highly profitable business that anyone can avail of. Of course, to maximize your profits, it is necessary to have some basic knowledge and trading skills. You are to use the movement of prices in the market for your own benefit. To put it simply, the task of a trader is to correctly predict price movements and make money on price differences over time.
Buying assets at a lower price and selling them at higher rates – this simplest market strategy is relevant for all sectors, including currencies and securities. If you want to start making money with Forex trading, you should understand how the market works, how trades are held on it, and what role traders play in all this. So, let’s consider Forex trading from scratch.
How to Get Started
In theory, trading on the stock exchange sounds very simple. A trader needs to buy an asset, wait for the price to rise, and then sell it. But in fact, the beginner has a lot of questions. How to buy an asset? Where to buy it? How much to invest? How to predict the price? Let’s try to find answers together.
A trader’s work begins with the selection of a site and an asset. When it comes to the latter, you should consider the following options:
- Currency – Both a beginner and an experienced trader can make money on currency pair quotes. Beginners should focus on currencies with low and medium volatility (that is, relatively stable ones, whose price changes slowly). They are also called fiat currencies. These usually include GBP/JPY, EUR/JPY, CAD/CHF, EUR/GBP, AUD/NZD. They will bring less profit than working with high-volatility pairs, but such trading on the exchange is better for beginners. A novice trader will be protected by the rapid loss of the deposit due to several unsuccessful transactions.
- Stocks – These assets are traded on stock exchanges. Stocks are considered classic financial instruments that are suitable for risk-free trading and investment. A beginner can start with them.
- Securities – These are futures and options – securities that have a short and clearly limited duration. The derivatives market is very volatile, and it can be difficult for a beginner to start with. But you can get serious profit here.
Having chosen an asset and a platform, a trader must find a broker for oneself. A broker is a financial company that will act as an intermediary between a trader and the exchange. By concluding an agreement with a broker, you will gain access to the exchanges. This is where the fun begins. When choosing a broker, it is important to correctly consider the following criteria:
- Reputation and quality of work;
- Terms of trading;
In case you do not know what broker to choose, you can always check specialized forums and review platforms. You will find a lot of useful information there and will have a clear picture of a particular company. Instead of going with the very first random broker, research the market and make an informed decision.