Forex is quite an interesting market that is attracting people every day and is considered to be the largest virtual market in the world. It makes it easy for people to make money even with limited experience. However, if not handled well, you can lose everything you have in the trade. This is especially when you go straight into trading without learning the process adequately. A lot of patience and self-control is required to make it in the trade. Also, it is critical that you take the trade as a business not just as a hobby. How do you get started in forex?
Get a Reputable Broker
Before signing with a forex institution, get to know whether they are registered with the Commodity Futures Trading Commission and the Future Commission Merchant. Checking their website will reveal this information. You can also check for additional information just by searching the brokerage name or checking whether they are listed iwill not be after your money, carry out unauthorized transactions or worse still, defraud you but it will ensure your interests are safeguarded.
Start with a Demo
Although you will not be making any actual money, a demo will help you learn the trades fast. This is more important if you have never traded before. Instead of going straight into the actual trades, start slowly with a demo. Going for the trades without enough knowledge and experience can lead to great losses. Even when the broker promises to help you make the right decisions, don’t ignore the demo accounts. There is a lot to learn before you start making real cash.
Know the Currencies
The major currencies you will be dealing with include the US dollar, British Pound, Australian/ New Zealand Dollar, Euro, Swiss franc, Canadian dollar, and Japanese Yen. These are usually regarded as the major eight currencies. All trades are conducted in pairs. For instance, the USD/JPY, EURO/USD, and AUD/USD. All the currency pairs are 18. This gives you a wide choice when making the actual trades.
Learning how to leverage ensures you do not lose much in case you make a wrong decision. Leverage is the ratio of the actual capital to the amount the broker is willing to lend to you. For some, the ratio may be 100 to 1 which means that for every dollar, the broker can lend 100$. Lower leverages mean lower risks and profits, therefore, if you want to make more, you should increase the leverage but this should only be done when you have enough practice.
Start with Low Spreads
A spread, which is the difference between the buying and selling price of a currency, is important to consider. This is where brokers make their money. Low spreads ensure you do not lose much of your investment.
As you practice, you will learn your weak and high points and improve as need be. Also, you will get to understand the forces that determine the market trends. In fact, you will be able to predict accurately how the currencies will behave just by checking important world happenings. As most forex trading professionals agree, it is easy to make money in forex with the right information.