There is no question that when it comes to forex trading, there are endless things to learn and know. However, finding the time and the funds to actually invest in your forex education can be expensive and time consuming. However, if you are ready to increase your knowledge without going broke, use the tips here.
Establish Communication with The Forex Broker
The best place to start when you are working to improve your trading knowledge is with your forex broker. They typically have access to all sorts of information such as news, analysis, tools and more. There are some forex brokers who provide entire education centers that are dedicated to helping you increase your knowledge regarding the foreign exchange market.
In addition to resources, the forex broker you use should also provide you with a demo account, where you will be able to practice your trading, at no cost. This type of account is the ideal opportunity to engage with and review the platforms that are available and learn about what to do prior to getting started with your real money.
Choose a broker
There are quite literally millions of different forex brokers to choose from and you should look at what each one offers.
If you did the first step right, then you should be able to understand what they are offering and how this compares to other brokers. If not, then you need to do more research!
Ideally, you should stick to a well-known broker, one that many people use and is trustworthy. You should be able to check reviews brokers and see what people are saying.
It is best to avoid lesser-known brokers as it can be harder to tell if they are scams or not. Further to that, they will likely not offer the same quality service a well-known broker will.
You also do not need to pay too much attention to special offers for new traders. If a broker is good, they shouldn’t need to offer you anything extra.
But none of this really matters if the broker you choose is not regulated! This is the most important thing to look for. If you can’t find out who regulates them, stay away.
And preferably, the country that regulates the broker should be the same as the one you reside in.
Sign Up for a Training Course
One of the best and most effective ways for you to increase your knowledge of the forex market is by enrolling in a forex trading training course. While this may be a bit more expensive option, chances are you will be able to find something that meets your budget.
If you are ready to be immersed in the environment of currency trading, and surrounded by experts in the field, then this trading course is perfect. You will be able to gain knowledge about the trading and the chance to interact with your tutor, asking questions that come up along the way. The valuable lessons that you can learn can help you during your trades.
Forex Trading For Beginners
To summarize the whole beginner’s phase of starting to trade Forex we need to look at exactly 10 major steps that a beginner has to take.
- Learning the basics (currency pairs)
- Learn the software (MT4, MT5)
- Learn with demo accounts
- Find a reliable service provider
- Use the service provider’s resources such as tools and guides
- Try out the support services of the provider
- Learn about strategies and try them all out
- Create a plan for reading news and doing independent analysis
- Keep weekly track of the progress
- Start placing real trades
Understand basic forex terminology
- The type of currency you are spending or getting rid of, is the base currency. The currency that you are purchasing is called quote currency. In forex trading, you sell one currency to purchase another.
- The exchange rate tells you how much you have to spend in quote currency to purchase base currency.
- A long position means that you want to buy the base currency and sell the quote currency. In our example above, you would want to sell U.S. dollars to purchase British pounds.
- A short position means that you want to buy quote currency and sell the base currency. In other words, you would sell British pounds and purchase U.S. dollars.
- The bid price is the price at which your broker is willing to buy base currency in exchange for quote currency. The bid is the best price at which you are willing to sell your quote currency on the market.
- The ask price, or the offer price is the price at which your broker will sell base currency in exchange for quote currency. The ask price is the best available price at which you are willing to buy from the market.
- A spread is the difference between the bid price and the asking price
Utilize Free Resources and Practice Demo Account
Forex first became popular back in the 1990s, but it has changed quite a bit since then. In the past, you would have to travel several thousands of miles in order to find a reliable trading course that was being hosted by a professional in the industry. However, today, you can simply Review Online Forex Brokers, find one that offers free webinars, or tutorials and take advantage of their knowledge in the comfort of your office or home. This has made forex trading accessible to more people than ever before.
Manage Risk and Emotions
Managing risk and managing your emotions go hand in hand. When people feel greedy, fearful, or another emotion, this may be when they're more likely to make mistakes with risk. And this is what often causes failure.
When you look at a trading chart, approach it with a logical mindset that only sees the presence or lack of potential for success. It should never be a matter of excitement.
If pulling the trigger on a trade feels emotional in any way, you should re-evaluate why you're doing it and try to regain an objective mindset.
Use a Micro Forex Account
The downfall of learning forex trading with a demo account alone is that you don't get to experience what it's like to have your hard-earned money on the line. Trading instructors often recommend that you open a micro forex trading account, or an account with a variable-trade-size broker, that will allow you to make small trades.
Trading small will allow you to put some money on the line, but it will also allow you to expose yourself to very small losses if you make mistakes or enter into losing trades. This will teach you far more than anything that you can read on a site, book, or forex trading forum, and it gives an entirely new angle to anything that you'll learn while trading on a demo account.
3 Things to grasp in currency trading:
- Currency Prices
- Currency Trades
- Types of currency traders
In Forex, the spread is basically the difference between the bid and ask price of a currency pair. Let’s look at an example:
Let’s say that the bid price is 101.15 and the asking price is 101.20 the spread is 5.
A spread is measured in pips, so the above would be called a 5 pip spread. If this is a bit overwhelming check out our How to guide explaining all you need to know about Pips. This is forex 101.
A pip is an acronym for “percentage in point” which is the smallest price move that an exchange rate can make based on what is currently happening in the market.
Currency pair traders will buy or sell a currency whose value is expressed in relation to the other currency. A pip is one of the most basic concepts of currency pair trading.
In Forex trading, the value of a currency pair will need to essentially cross the spread before it becomes profitable.
What is the cost?
Online Forex trading can and has been a great income-generating activity; it is extremely important to treat this trading as a business activity.
It’s important to consider how to maximize your income, minimize your costs and risks, which are always a big part of trading. Its a buy and sell exercise explained in lament terms.
You must always consider the costs of trading with Forex brokers, that is before you decide on the right broker for you.
You will need to have an account with a Forex broker to begin trading in Forex; because there are no set rules on how Forex dealers charge, you are going to need to investigate and compare the costs and services of brokers.
Available trading tools
Another factor to take into consideration is the quality of trading tools a Forex broker will offer. It can make a huge difference to your initial trading experience. Usually, the tools and features available to you depend on which trading platform or platforms are being used.
Initially, you want a simple, intuitive trading platform, later on, you can level up to take advantage of more advanced, professional features and tools.
Tips for beginner traders
- Do your research, educational videos for beginners, educational articles and tutorials, Forex trading seminars for beginners, Forex trading webinars.
- Learn as much as possible before your 1st fx trading session.
- Try out a demo account, or practice with simulation software.
- Try not to overcomplicate situations, risks, and other things.
- Be careful of volatile markets.
- Follow trends as they boom.
- The trade is open until it’s closed.
- Write down EVERYTHING in a log: points for further research, reasons to open or close a specific trade, your achievements and mistakes.
- Start with the bigger fx currency pairs to trade with like AUD / USD / GDP / EUR / ZAR / CAD
- Liquidity providers should be on top of your list when choosing an fx trading broker.
- Always have a stop and limit loss in place.
- Understand the risks involved!