How do I start trading on Forex?
Forex is a decentralized world currency market. It is the largest and most highly liquid market in the world (the whole truth about forex). The average annual trading volume here is over 5 trillion dollars. None of the stock exchanges can compare to forex in terms of profitability. For this reason, many traders sooner or later begin to be interested in this market.
However, very often people come here who do not know anything about what Forex trading is. And the result is always the same - deposits merge one after another, and to prevent this, you only need to spend a small amount of time studying the market (learning to trade in forex). In this case, you will be able to start trading correctly and do not make many mistakes.
With what to begin trading on forex?
So, if you have decided to make money on the financial market, it is time to become a trader. A quite logical question arises - where to start?
Think hard about it for a start. Forex is not like a casino, where, having guessed correctly the combination, you can earn money, forex is not a bank, where interest will be accumulated without any effort. For trading, as for any other activity, you need knowledge, skills and patience. When trading on Forex, you need to keep learning and improving. One of the most important points is the ability to make decisions, objectively assessing all the pros and cons of the market situation.
If you make a firm decision to trade, you should get the necessary knowledge. Unfortunately, here you will not use the skills from everyday life. Terminal for trading contains many incomprehensible names, the analysis of the market is very diverse and it becomes difficult to understand where to start.
As soon as you get the necessary minimum knowledge, you can start trading. As a rule, services on Forex are provided by brokerage companies, banks and dealing centers. You should choose the firm to which the client has the most confidence. This stage is very responsible, as the trader is alone, and brokerage companies are many. On how to find a forex broker, let's talk in more detail.
How to choose a forex broker?
The choice of a brokerage company must be made on a number of criteria.
The first criterion - time of existence. The longer the firm operates in the market, the more reliable it will be. The forex industry received rapid development in 1997 - 1998. Just at this time there were the most reliable brokers. But there are younger firms, which also have a good reputation. For example, the company AMarkets (site), which operates since 2007 and over the years it has firmly established itself in the industry.
The second criterion is the number of clients and the way they treat the broker. Thanks to this indicator it is possible to estimate the authority of the company. For example, the broker AMarkets is among the top 3 companies with the highest success rate of clients.
The spread follows. As we know, brokers earn on spreads and commissions, in other words, on the difference between the price of currency purchase and the price of its sale. The spread has no constant value. It can widen and narrow, but there are certain values.
The next task when choosing a dealing center is to find a company with the minimum spread on the main trading instruments. The key currency pairs are those instruments that have the lowest spread. They are otherwise called "major" pairs.
Sale of currency is carried out in certain volumes - lots. The smaller is the lot, the less money it will take to open a position. Risk and yield in this case, of course, are also low. The minimum lot of available - "0.01" - 1000 currency units. It is advisable to stay away from those brokers that do not allow you to trade on the exchange with minimum lots, otherwise it is highly probable that your deposit will quickly jump into the pocket of such a broker.
Leverage. The more leverage you have, the more risky operations can be performed at the exchange. Leverage can be disregarded if a conservative type of trading is planned. Leverage trading allows you to withdraw your entire deposit, but you will not be able to get into debt, because as soon as your losses become critical but remain within your deposit, all transactions will be automatically closed.
Another indicator when choosing a broker is the number of instruments that the broker allows you to trade. The more instruments you choose, the more diverse your trading will be. There are assets with strong volatility, there are more stable, but slower.