At its most basic level, when you place a Forex trade you’re hoping a currency is going to move in the direction you want it to, either up or down, relative to another currency.
For example, you might think the Euro (EUR) is going to increase in value against the Australian dollar (AUD) so you could place a trade to buy the EUR/AUD currency pair. If the Euro rises you would make a profit; if it drops you would incur a loss. Conversely, if you thought the Euro was going to decrease in value you could place a trade that would benefit from that price movement.
Online trading platforms make trading very simple as they provide access to trading tools, analytical resources and education material. Before launching with a live account, traders should spend time familiarising themselves with the way the Forex market works and establishing a realistic trading strategy based on their individual goals.
There are plenty of reasons why people choose to trade Forex, from wanting to earn some extra income to pursuing a new career. Here are three of the main reasons our clients enjoy Forex trading:
Markets are open 24 hours
With different market opening hours around the world, you can trade currency 24 hours a day, 5 days a week. This generally suits traders who work during the day as they’re able to trade at home in the evenings. It also means you don’t experience overnight gaps in the market.
Forex is low cost
When you trade Forex, instead of paying a commission like you would with shares, you pay a very small mark-up to the price called the Spread. Typically, the spread is only a fraction of a cent for each dollar you trade.
Forex allows you to start small
When you begin Forex trading you can start at a very small size. And with small trades, your commissions are also small - meaning, unlike stocks, your profits don’t get eaten up by commission.
It doesn’t matter if you’ve never traded before, are a seasoned pro, have a lot of time to trade or only a little - Forex trading offers versatility and opportunity for everyone. Forex trading is particularly popular for the following:
New traders getting started in the markets
Day traders placing several trades a day
Swing traders holding trades for a few days
Carry traders holding positions for weeks or months
Traders who like the convenience of mobile trading
It’s easy for new traders to spend a lot of time researching which trading platform to use or looking for the latest technological solution. The reality is a new trader doesn’t really know what they are going to need until they uncover their trading style. This means it’s better to begin with the basics and focus on learning enough to get started with a minimum of risk.
As an introduction, a new trader could consider starting with the following basics:
An online Forex trading platform with charting options, such as MT4
A demo account that lets you practice trading with virtual money, at no risk
Tutorials like How to use your platform
Some basic Forex education
As you advance your trading, the following tools may be of use:
A more Advanced Forex Trading platform
More in-depth education
Technical analysis from expert traders
Automated trade journal
Pro account (for high volume traders)
Looking for a plan to get started trading? Follow these steps:
By placing some practice trades in a disciplined manner you’ll start to get a good feel for what it is all about. You can then read the following articles to get a handle on your trading strategy.
The First Key to Forex System Development: Market Types
The Second Key to Forex System Development: Complex Exits and Simple Entries
The Third Key to Forex System Development: Damn Good set-ups
It’s also worth watching these Forex trading mistakes and working on your trading psychology in the following articles:
The Guide to Finding Your Inner Trader
The Power of Beliefs and How they Shape Their Trading Psychology
10 Mental Tool to Inspire Peak Trading Performance
If you have any questions about Forex trading, feel free to speak to our client support team.