Forex trading today is now one of the hottest trades and it’s no surprise why. Being the largest, most liquid and also lucrative trade, you can bet this has become a magnet for all sorts of traders. And since this run 24/7 you can bet this market has twice as many “peak” hours compared to other trades.
But one thing forex shares greatly with other trades is their volatility. Yes, even the most popular trade today is pretty risky. That’s why before entering this trade make sure it’s for you by knowing more about it.
To help you get well acquainted with forex trading and its market below is a list of FAQs about this trade, so check it all out down below!
Forex is short for foreign exchange and in this trade, you exchange currency. Basically, you speculate on a currency’s market price to profit and to do so you need to trade it in pairs. In forex trading, currency pairs contain a base currency and a quote currency.
A quotation currency is a pair you wish to swap for, and a base currency is the other half of the pair you want to trade. The base currency is what you go short for and the quote currency is what you go long for.
The terms go long and go short are something you’ll always bump into when trading in forex. Go short means to sell and go long means to buy. Basically, you go short for a trade you don’t think will rise in value so you sell, and you go long for a trade you think will increase in price so you buy.
An example of currency pairs is EUR/USD, USD/JPY, AUD/USD, USD/CAD, GBP/USD and many more. In a nutshell, this trade allows you to trade currencies and if your speculations are right and the market does lean in your favor, you profit. And if it doesn’t, you don’t.
Reasons why this attracts various traders are a handful but one of the main reasons is how easy it is to trade forex. To help you out below is a step-by-step guide you can use when starting your trading journey with forex. But remember, only proceed to the steps once you’ve learned what forex is and how its market works.
[Also Read:-How to make smart investments: A beginner’s guide]
Step 1: Pick out a trading platform of your choice
Before you can actually start trading with forex, first, you need a medium to do so. Trading platforms can help you trade efficiently with the use of trading tools, active charts and many other features they might offer.
And before settling with a platform, make sure they specialize in forex or offer a great variety of available currency pairs and tools to make the most out of your trades.
Step 2: Practice, practice, PRACTICE.
After signing up with a platform, consider practicing. Most platforms offer demo accounts where traders can master their skills and test out the waters without risking a single dime. So before actually trading, consider trying out demo accounts.
Demo accounts give you a feel of what it’s actually like to trade. You can expect to find trading tools, analytical tools, active charts and many more.
Step 3: Pick out a currency pair
Now you can pick out a currency pair! You can choose to go with popular pairs like Euro & US Dollars, US Dollars and Japanese Yen, British pound and US Dollars and so on. Once you find a pair you feel comfortable trading with, go forth and open a position!
So if you ever find yourself wondering “how to trade forex” you can always go back to this article for reference!
The answer to that is yes, it can make you rich but only if you play your cards out right. To guarantee success in this market you need to:
- Learn about forex and its market by taking courses, attending seminars and webinars and self-studying.
- Adapt skills in forex trading.
- Have a trading strategy in place and stick to it.
- Adapt and strict and disciplined attitude.
- Don’t let emotions affect your trading decisions.
- Only wager what you can afford.
Depending on your trading platform it may vary but, in some cases, you can open a position for as low as $10 or even less. But most of the time, you’re usually required to start with a capital of $1000 minimum.