Forex Basics

How to take your first step in the Forex market


You may have heard about the Forex market and its many investment advantages. Would you like to experiment, but not sure where to start. This brief article will introduce you to the basics of Forex, and thus will allow you to start your participation quickly in this growing market without stopping.

The foreign exchange market in the past was restricted to big players such as national banks and multinationals. In 1980 the rules of the game changed to allow young investors to participate by using margin accounts. Margin accounts have been the main reason why Forex trading is so popular. With a 1: 100 margin account, you can control $ 10,000 by investing only $ 1,000.

Forex trading is not easy, though, you will need some knowledge to be able to make wise investment decisions. Although starting to trade seems theoretically easy, it carries many risks. Your initial movement in this market should be to obtain the maximum possible knowledge of everything related to it before the risk begins even if for one year.

Forex traders usually need a broker to carry out their trade. Most brokers with good reputations are associated with major financial institutions such as banks. A good broker will be registered with the Futures Trading Commission (FCM) and the Commodity Futures Contracts Committee (CFTC) as a form of protection against abusive and fraudulent practices. 

Opening a Forex trading account is very easy, as it does not exceed filling out a form with your necessary information. The model contains a margin agreement that entitles the broker to interfere in any deal he deems to be extremely risky. This is done to protect the interests of brokers, given that most deals are executed using the broker’s funds. Once your account is established, you can deposit money with it to start doing business.

Many brokers offer a variety of accounts to suit the needs of individual investors. Mini accounts allow you to enter the world of Forex trading for $ 250. Standard accounts may require a minimum deposit of between $ 1,000 and $ 2,500, depending on the terms of each broker. The amount of leverage (the amount of money that can be borrowed for trade) varies by account type. Accounts with large leverage give the trader a greater amount of money to trade for, compared to the amount of investment he deposits.

Nevertheless – novice traders are strongly advised to first get used to the Forex market by using “paper trading” for a while. Paper deals are transactions for training and therefore no real money is used. This type of trading will allow you to measure the efficiency of the trading system you use while also providing an opportunity to know how to use the trading software tools provided by most Forex brokers.

Most online Forex brokers offer a practice account service that will allow you to make paper deals of up to 30 days. Every new Forex investor must use these demo accounts to ensure that they are able to achieve continuous profitable results.

Every Forex broker offers its own program tools for executing transactions, but there are a few common tools among all Forex brokers. Instant quotes, news feeds, technical analysis, interfaces, and profit and loss analysis tools are all features that you can expect to find on all broker websites.

Almost all brokers are now online. To access intermediary services over the Internet, you will need a relatively modern computer, a fast internet connection, and a new operating system such as Windows XP. Once the account is established, you can access it from any computer just by entering the account name and password. For one reason or another, if you cannot access your account through the computer, most brokers offer the ability to complete transactions over the phone.

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