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HOW TO TRADE FOREX
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HOW TO TRADE FOREX
Many want to make money in the forex market, but few who begin to trade forex want to do the prep work needed to become successful traders. While trading forex has become easier now than ever before because you can trade online via the internet, most novice traders still lose money. To get more news about Forex Trading, you can visit wikifx.com official website.
A combination of factors that include unfamiliarity with the market, insufficient trading capital, not trading according to a plan and failing to practice sound money management techniques to preserve trading capital contribute to the loss. But, once these inhibitory factors are overcome, just about anyone has a chance at becoming a successful forex trader.
5 Easy Steps to Trade Forex
You can take the following steps to prepare yourself to start trading forex:
Connect a device to the internet.
To trade forex, you’ll need access to a reliable Internet connection with minimal service interruptions to trade through an online broker. You’ll also need to obtain a smartphone, tablet or computer to run a trading platform on. If your internet drops while you’re trading, that can result in undesirable losses if the market moves against you.Find a suitable online forex broker.
You can probably open an account with an online forex broker no matter where you live. Just look for one that meets your requirements as a trader and will accept you as a client. At a minimum, the broker you choose should keep your money segregated from its own and operate in a well-regulated jurisdiction under the oversight of a reputable regulator, such as the UK’s Financial Conduct Authority (FCA) or the U.S. Commodity Futures Trading Commission (CFTC).Open and fund a trading account.
After you’ve decided on a broker, you can deposit funds into a trading account. Most online forex brokers accept a number of ways to fund an account, including bank wire transfers, debit card payments or transfers from electronic payment providers like Skrill or PayPal.Obtain a forex trading platform.
You will need to download or get access to an online forex trading platform supported by your broker. Most forex brokers either offer a proprietary trading platform or support a popular 3rd-party platform like MetaTrader4 and 5 (MT4/5) from MetaQuotes.com or NinjaTrader.Start trading.
After completing all of the previous steps, you now have a funded forex account and are ready to trade. You can also usually open a demo account funded with virtual money to test out the broker’s forex platforms and services before going live. Demo accounts are also beneficial for testing trading strategies and to practice trading without risking any funds.
Forex Trading Example
The most actively traded currency pair in the forex market is EUR/USD, which consists of the EU’s euro quoted with the U.S. dollar. If you thought the EUR/USD exchange rate was going to rise from its current 1.1700 level, then you might purchase €100,000 against the dollar today at that rate. If the EUR/USD rate then rose to 1.2000, you could use this calculation to compute your trading profit:
Best Online Forex Brokers
Your local retail forex regulatory environment will often determine whether international online brokers will accept clients from your country. Check with a broker directly to find out whether they will accept you as a client and make sure they provide all the services and tools you require. Also, make sure the broker is well regulated in their local jurisdiction by a major regulatory authority and segregates clients’ money from its own.Once you have narrowed your selection down to a few suitable brokers, look over their online reviews and see if they have a relatively satisfied customer base. If you don’t recognize the firm, then see how they compare to a well-known and regulated online broker by checking out this FOREX.com Review. Also, consider opening a demo account to try out its trading platform and services before you fund a live account.
Forex Trading Strategy Types
Now that you have a live trading account at a reputable online broker, you should plan on developing a trading strategy to boost your chances of success in the market. One or more strategies could suit your personality and level of market expertise, and the general strategy types discussed below are in common use among retail forex traders.Scalping
A very active strategy in which the scalper aims to profit from very short-term market moves. They enter and exit the market quickly to capture a few pips of profit at a time.Day Trading
A strategy in which positions are entered and exited throughout the day but closed out by the end of the single trading session. Day traders generally avoid taking the extra risk involved in holding positions overnight.Swing Trading
A “buy low, sell high” type of trading strategy, swing or momentum trading involves getting into and out of the market usually based on signals from momentum technical indicators like the RSI. Swing traders often take overnight positions.Trend Trading
A longer-term trading strategy that involves estimating intrinsic value and looking for established directional movements known as trends. These traders establish and hold positions to profit from the trend until it ends.