Forex trading is the buying and selling of different currencies. The foreign exchange market (Forex, FX or currency market) averages $6.6 trillion per day in transactions as of April 2019 according to the Bank for International Settlements. That is certainly a lot of currency being traded through this over-the-counter market for trading currency. The fact that you do not need a large investment or a fancy physical place to get into this business certainly makes it attractive. But this does not mean forex trading is easy or that anyone can become a successful forex trader overnight. Rather like every other business, it demands time, patience, knowledge, and experience. Here are some essential tips to become a forex trader.
Start with The Basics – Tips to Become a Forex Trader
Phones and laptops: Unlike other businesses, there is no central market in forex trading. Rather the forex exchange is a decentralized market where trading is carried out via phones, laptops, and the internet.
Currencies: There are six major currencies when it comes to forex trading. The major currencies are American dollars, Canadian dollars, Australian dollars, Japanese Yen, British pound, and the Euro. All remaining currencies are referred to as minors.
Trading in Pairs: In a forex world, currencies are traded in pairs. For instance, a currency pair can be Japanese Yen/American Dollars (JPY/USD). The first currency is always the Base currency. In this example, JPY is the base currency.
Bid/Ask Rate: This is one of the key terms of forex trading. The Bid is the rate at which Base currency, or its equivalent currency is sold. Ask is the price which the buyer is willing to pay to buy the Base or its equivalent currency.
Understanding the System
FX Software: All deals are carried out on the FX software, which forms the framework for all trades conducted through the foreign exchange market.
Forex Signals: Think of forex signals as a running scorecard that provides traders with the correct currency pair and accurate pricing to guide them when entering a trade. Typically, a forex signal is valid for an hour only. These forex signals are sent by financial institutions and major banks all over the globe.
How to get a Forex Signal: To get alerts for FX signals, you need to subscribe to them. Human analysts who either send emails or texts on mobile phones to subscribers usually create these signals.
Finding A Broker
A broker works as a medium between you and the forex market. If you are an expert in forex trading, you do not need a broker. But if you are new, the broker can help by providing advice and other information to point you in the right direction for your trades. Find a registered broker who has enough knowledge and experience to make it worth your while as there are fees for using a broker.
Demo Versions – Tips to Become a Forex Trader
Demo version are just what the name implies – they are programs that simulate the actual trading environment. Why start with a demo version? You may be aware of the basic terminology and systems. You may even have a broker. However, that doesn’t mean you should start trading immediately.
Use the demo versions to become familiar with how the system works. This way, you won’t be wasting any money by making an illegal trade. Learn from the demo versions and step in the forex trading market with confidence.
Furthermore, be clear about your goals and objectives. Make a clear plan about what you want to achieve and where you see yourself in the coming years. By following these steps, you will be able to learn the art of forex trading and gradually become a successful forex trader in the World.