How to start Forex trading for beginners
If you are interested in how to start working on Forex, then this material can help you a lot.
Many come to the foreign exchange market and quickly leave, without understanding what is what. Many brokerage companies say that nothing is easier than Forex trading. Sometimes this is true, but a lot depends on what a person expects from forex trading in the foreign exchange market.
If you are interested in professional Forex trading – where should a beginner start?
First of all, this is the relevant knowledge. There are a lot of books and video lessons on this topic. All of them are informative to one degree or another, but they are not always targeted at those who do not yet understand anything about the foreign exchange market.
HOW TO START WORKING IN FOREX FOR A BEGINNER.
The path of a beginner from a beginner to an independent and successful trader should consist of approximately the following steps:
- Basic theory (books, video tutorials);
- Choosing a broker ;
- Determination of a forex trading strategy and trading style;
- forex trading on a demo account;
- Debugging a strategy;
- Deposit and start forex trading as such.
It is important to say that Forex is a high-risk market and everyone has losses. It is necessary to understand at an early stage that losses will occur, and they are an integral part of successful forex trading. This is best understood when forex trading on a demo account. But it will be fixed in the best way when forex trading on a cent or micro account.
Now, briefly about all the above steps.
There are a lot of materials on the topic of where to start forex trading. Among them are books, videos, interactive courses, as well as classes with teachers at brokerage companies.
Much depends on how well the beginner is receptive to a particular method of obtaining information and his basic education. But in general, online courses and books give a good overall result, and the student will have good theoretical knowledge in the end.
From the literature I can recommend “Forex for beginners”. (V. Barishpolets), “Trading is your way to financial freedom.” (Van Tharp) and Day Trading Textbook (Lewis Borsellino). This literature plus courses on the Internet will allow you to move on to the next step without any problems.
CHOOSING A BROKER
Choosing a broker is one of the most critical steps when starting a trade. This sometimes determines what impressions a trader will get when starting a trade and whether he will continue to trade.
Parameters that are important to consider when choosing a Forex broker:
The minimum amount to start forex trading on Forex.
Reviews about the broker from already forex trading traders.
Availability of trading instruments.
The absence of a forex broker in the ” black lists “.
Admissibility of using forex trading robots.
This is the basis from which you need to build on, and if the broker meets at least three parameters, you can try to start working with it (the exception is the fourth point. You cannot work with such brokers under any circumstances).
When you have more or less familiarized yourself with the broker’s terms and conditions, it is recommended to move on to developing your own strategy and trading style.
There are many styles and methods of trading, as well as traders. But there are some basic parameters by which you can determine whether a trading style is right for you or not. Intraday trading can be distinguished, positional, and averaged.
Day trading comes with a lot of stress and risks. The trader opens short deals and tries to catch the trend on minimal fluctuations and earn money due to this. The most preferred currency pairs are EUR / USD, GBP / USD and other volatile instruments.
Average trading suggests a more measured style. Deals can be open from a day to a week, the risks are much less. But for this, it is necessary to carry out more detailed fundamental and technical analysis, as well as constantly receive information about force majeure situations and follow the news release.
Positional trading differs in that most open trades can last for weeks or months. The calculation is made for the future development of the market and at the exit position traders can get very serious profits. But for a correct assessment of the reversal, movement and endpoints of the market, a very in-depth fundamental analysis is required, which will make it possible to make a relatively plausible forecast.
To analyze the situation, forex traders use fundamental and technical analysis. Fundamental analysis involves using news and economic news to predict market direction (which in turn depends on a variety of factors). Technical analysis is based on assessing previous charts and potential market development based on trading indicators and chart patterns.
DEMO TRADING AND STRATEGY DEBUGGING
Trading on a demo account is the use of virtual currency in order to make foreign exchange transactions in the Forex market. You cannot withdraw and use this money, but it has a different value. First of all, trading on a demo account gives a good experience and understanding of how the market works. Experienced traders and beginners alike use demo accounts to test trading strategies and robots. And only then they go to trade with them on the real market with a real deposit.
For a beginner trader, a demo account is a great opportunity to get first impressions of the market and think over your behavior after making a deposit (how much to start trading on Forex, we will talk a little later). And also there is an opportunity to test other people’s trading strategies, indicators and special trading robots that can help in trading.
After successfully choosing a trading style and choosing a strategy, you need to see for about a week how a virtual deposit will behave under your guidance. If all is well, then you need to wait another week to make sure that the actions are being performed correctly. If not, then the strategy needs to be debugged and the algorithm repeated.
DEPOSIT AND START TRADING
This is the final step on the path of a beginner to becoming a trader as such. If all knowledge has been successfully mastered, and the strategy on a demo account shows flawless results, then it makes sense to try yourself on a real account. It is worth starting with a small deposit (200 $ most often, more than enough to start). Moreover, some brokerage companies provide additional bonuses when replenishing an account.
HOW TO START MAKING MONEY ON FOREX FOR A BEGINNER?
One way or another, the beginner will suffer losses, as I said earlier. This is a harsh reality that you just need to come to terms with and not make a tragedy out of it. It is unpleasant, but over time, traders get used to this idea and do not attach much importance to losses.
First of all, to make money, you need a well-functioning trading strategy that works on a demo account. It doesn’t matter if it’s manual or automatic. It should provide for the maximum allowable loss limits, as well as trading parameters (lot, trading instrument, etc.). In order to effectively earn your first few dollars, it is worth trying intraday news trading. News is a great way to make money, as the market movement on news is obvious and extremely profitable.
Guided by the basics of money management, you can effectively make the first more or less strong capital in order to try trading in large volumes and try other strategies.