Taking the first steps into the world of Forex might seem daunting for most newbies. But it doesn’t have to be like that. Let’s take a sneak peek into what it’s usually like when venturing into Forex trading and how to increase your chances for success from the very beginning.
Setting up a trading plan
Every successful wannabe trader must have a good trading plan in place. It should include the amount of time and money you can invest and the amount you can afford to lose per trade, daily or monthly. Also, depending on your personality, you will choose your trading style.
Opening a trading account
For currency trading, you need to open a trading account on the brokerage platform. Look for the regulated ones with suitable educational materials and easy to use interface. Of course, you shouldn’t neglect the minimum deposits and spreads, but it shouldn’t be the decisive factor for making a good choice. However, finding the right fit could be time-consuming, especially if you do random research on the internet. Fortunately, the Forex broker review is a well-grounded and concise source of the necessary information for beginners. It comprises everything from regulation aspects, spreads, and available trading assets, but also many more.
What does the trading process look like?
1. Choosing the currencies for trade
With so many currency pairs available for trading, you need to narrow down your choice. Even the experienced only opt for two to four pairs to trade. Every currency pair has its specificity related to the many economic factors. So, pick up the one for a start to learn all its perks and downsides.
2. Reading the charts
Once you choose the currency pair, you need to open the chart related to that pair to see the trading opportunities. After selecting the time frame of trade, you will see the market trend of the chosen trading asset.
3. Placing the order
This is the core of the trading process since you decide on whether to buy or sell. Also, you decide upon the size of a lot. There are micro mini and nano lots equal to the units you trade. Simply put, you may trade 10 000, 1000, or 100. There are also 100000 unit sizes. For instance, you want to trade 10 000 AUD for YEN. It means you trade one mini lot.
4. Setting stop loss and take profit limits
It’s not necessary to take this step, but it is highly advisable since it makes part of risk management. Stop-loss shields you from losing money if the market goes in an unwanted direction at the specific moment of the trade. Take profits to ensure the exit point just at the moment when the downward trend is expected. If the trade has resulted in gains, the earned amount is allocated to your account. From there, you can invest in another trade or withdraw the money.
Always start with a demo account!
The above-described trading process seems to be relatively straightforward. And it is once you learn the ropes of the market. But, before that, you need to learn and practice on a demo account that allows you to place orders in real market conditions without a penny invested.