Have you ever known that Daily Forex trade volume is more than 10 times than stock trading? Big banks and financial institution participate in Forex trading with huge money. Average daily stock trading volume is $20B -$30B, whereas daily Forex trade volume is more than $5 Trillion! Also, there are only limited currencies available for trading, unlike thousands of stocks.
Wouldn’t you like to be a part of that? Learning how to trade Forex is essential if you want to access an amazing investment opportunity. The Forex market sees trading volumes as high as $5 trillion per day. Here are some steps to learn trading Forex.
Remember trading Forex is as easy as placing stock orders online.
The Best Way to Learn How to Trade Forex
The best way to learn how to trade forex is via a demo account with the broker that you are hoping to eventually trade with. This will let you get familiar with the platform. Most companies use Meta Trader these days – this is an easy to use trading platform with a lot of useful features for people who like to use technical analysis techniques to manage their trades.
Forex trading is quite a busy industry. You will probably make several trades per day. you can set trading points for stop losses and to sell to take profits. You should use these wisely to ensure that no matter what direction the markets move in, your finances are protected.
Once you have traded for a while with a micro account – to learn how trendlines work, and how to set your trades up, you can fund your account and start trading for real.
Most traders who know how to trade forex use margins and leverage to amplify their earning potential. If you trade using 50:1 leverage, then this means that every $1 of your own funds will get you $50 worth of currency – you will get the profits as if you had bought $50 should the markets move upwards for you, and the losses if the markets move in the wrong direction.
Be wary of this – because if you don’t set a stop loss and the currency you have invested in crashes in value, you could end up getting a ‘margin call’, meaning that there is not enough money in your account to cover the losses and you either have to sell your investment to cover it (losing all the money tied up in it), or fund your account to cover the position.
Be careful in choosing your trading platform. Compare their fee structure and other rules that can affect your trading. There’s nothing unfortunate than the inability to trade Forex right at the moment you want to, due to a technical glitch.
Careful With The Margins
Margin mistakes are one of the worst things that can happen to any trader, and they are one of the reasons that such a large percentage of people who try forex trading lose money.
For this reason, it is important that you only invest money that you can afford to lose and to start trading only when you understand how to trade forex.
Monitor your account carefully, and plan each trade. Don’t get emotionally invested in a currency pair or a trend – if empirical evidence shows you that a certain decision should be the right one, then follow it. There is no such thing as a ‘losing streak’ or ‘being on a roll’.
The outcome of one trade is separate to the outcome of the next, and the only evidence you should be paying attention to is the fundamentals you see on the news, combined with the trendlines and the sequences that Meta Trader (or your chosen trading platform) is helping you to plot. Use those, and you will not go far wrong in the long term.
Consider some fundamental points
Since in Forex trading, you deal with national currencies, you need to be aware of the country’s economic and political environemnt. You need to be aware of general elections happening in that particular country and how the new leader is perceived in the financial market.
You also need to be aware of conflicts between countries and any other social unrest that can bring down the value of its currency.
Learn to make predictions about the economy as a whole. If you believe that the Chinese economy will weaken further, which is bad for the Chinese Yuan, then you probably want to sell Yuans in exchange for a currency from a country where the economy is strong, say US Dollars.
Readers, if you trade Forex, share what you know with us. How was your early experience and learning?