In preparation to start Forex currency trading, you need to find answers to a few questions and embark on some Forex training.
How to select a Forex broker?
Is it necessary to use a Forex demo account?
What I need to know prior to doing my first currency trade?
It is good to answer these questions one by one on their merits.
Selecting a Forex Broker
While some traders will be happy with options and Forex tools offered by a certain broker, there are others who dislike him for the same options.
Therefore, it is important to look at the tools and options offered by the Forex brokers and select the one who offers the most favorable options for you. It helps to research broker recommendations from other Forex currency traders.
Open your Forex Demo Account
After selecting your broker, you need to open your Forex demo account to learn how to trade Forex using the tools supplied. Most brokers will give you a 30 day trial for you to get accustomed with their trading platform and you will be doing your currency trading with the use of play money.
The demo account will give you the opportunity to be familiar with the trading tools used by the particular broker and to learn to spot Forex buy and sell signals before trading with real money (your money). Until you are familiar with the Forex market, you should be reluctant to use real money for trading, Forex rates can move quickly and it’s easy for those learning to trade Forex to loose money.
Getting used to the brokers tools is not the only benefit of your Forex demo account, but also it helps you do prepare for real trading on the market.
Forex Training : Learn About Leverage or Trading on the Margin
Typically Forex trading is done with the usage of leverage which really is trading on margin. Margin could be useful as a tool but if not used properly it could also be very dangerous. It is normal for Forex traders to use leverage from 50:1 up to 400:1.
As the number goes up, the volume of money you need to use on a large trade will come down. You need to exercise utmost care when using leverage as the amount of money you can gain increases so does the risks of loosing your money.
Be Familiar with Reading Forex Trading Charts
Before going into trading, you need to understand currency charts and the way they work. You need to learn to work on different time frames and charts of different types.
Time frames of shorter duration will provide you with an understanding on the changes of market behavior by the minute. Time frames that are longer will give you an idea how the market behaves through longer periods and will tell you of larger trends.
Majority of the Forex charts will have candlesticks, lines or bars. Take your own time and try using different time frames and different looks in order to learn the style that you will find it easy to manage.
Live Forex Trading Signals
You will be nervous and excited on the first trading. Emotions may overtake you even though you prepared for it with your Forex demo account.
Level headedness is important here. You may find it difficult but you need to control your emotions and use correct money management to overcome those difficulties. In case you lose with your first trade, you must not give up. Instead, correct yourself and make another attempt.
Forex trading could be a continuous learning process. Mistakes made in trading may cost you a lot see Forex Trading System Review for example. If you learn from your previous mistakes you could end up as a very successful currency trader.