Basic Tips on How to Trade In the Foreign
Exchange Market
Forex trading beginner tips and
clarifications
Forex trading is great not just for advanced traders, but for beginners as well. It offers accessibility,
liquidity, and leverage. You do not have to shell out a huge amount of money to trade. You can start with a small
capital. You can actually begin trading currencies with a $100 deposit.
No deposit account conditions
With most brokers, there are no deposit accounts necessary. So, you can start with zero funds. However, you may
have to register for a lifetime trading account that contains $25 to
$50 free money. You can only make a withdrawal after trading a certain volume. Nonetheless, your account would
remain live.
 |
Before you endeavour into forex trading, even paper
trading for beginners, you need to learn some basic tips
to help you start understanding the foreign exchange market. (Image by
Pixabay.com) |
Trade anytime
The foreign exchange market is very liquid. The constant supply and demand for money just never runs out. The
market is actually open twenty-four hours, five days a week. You can trade anytime during the weekdays, but not on
the weekends. This is great since you do not need to adjust your schedule. You can trade after work hours or in the
evening, for instance.
Employ leverage
Keep in mind the general rule of thumb in Forex trading: the larger your capital, the larger your trade size,
it is important for you to have leverage. When you employ leverage, you can sell or buy up to
five hundred times more funds than what you have. This would allow you to generate more gains even if you do not
have a huge capital.
Discuss leverage with your broker
Once you start trading with a particular Forex broker, you may want to
consider modifying your leverage level. You have to discuss this with your broker, however. Ideally, your broker
should let you use an industry standardized procedure as well as choose your account and change your leverage from
there. Keep in mind that your leverage is linked to your account deposit level. Sometimes, when you deposit
additional funds to your trading account, your currency trading leverage is reduced.
Trading currency pairs
Note that Forex is also traded via currency pairs. You do not simply trade Canadian or US dollars. You trade two
different currencies. You can trade euro quotes against US dollars, EUR/USD for example. When you do this, you trade US dollars for euros and your account
holding currency does not even matter. You should know about the international code specifying currency pair
setup.
Currently, the strongest and most dominant currency is the US dollar. It is also the most widely traded because
it is the most preferred reference in many currency exchange transactions all over the globe. Anyway, with more
than two hundred countries, you can only find several currency pairs to trade. You should choose the currency pairs
that can deliver the best results. Some of the most popular currencies include the US dollar (USD), Australian
dollar (AUD), Canadian dollar (CAD), Euro (EUR), Swiss franc (CHF), Japanese yen (JPY), and British pound
(GBP).
|