Getting involved in forex trading can be a lucrative prospect for many, but there’s a lot to learn! If you want to become a forex trader, then this is the beginner’s guide you need to get started.
We’ll take you through the basics and get started on some of the more advanced aspects too.
Starting to Trade
When you begin to trade, you might be confused by some of the terminology that’s being used out there. Taking the time to understand what these mean is essential, as you can’t hope to trade effectively if you don’t have the knowledge to understand what the figures mean.
The most common way to trade within forex is to use two pairs, which usually consist of 8 main currencies. They include EUR, GBP, USD and more popular currencies. The pairs mean that you’re buying one and selling another – making the most of the differences between their values.
You also need to consider what kind of trading you want to take part in, whether that’s a short term day trade or you want to manage this for longer. Day trading is one of the most common ways to trade, you buy in and then cash out at the end of the day.
Predicting Trends
Once you know how to trade, you want to learn more about how to trade effectively. Predicting trends will allow you to figure out the best way to spend your money in order to create the best possible return. Keeping an eye out on the latest financial forecasts is a great way to inform your decisions.
You can use forecasts from the likes of Commerzbank, which tend to be accurate within a 0.33 percentage point of the final figure. They’re able to forecast the CPI and GDP with great accuracy, according to a study conducted by ETX Capital.
If you have this kind of information on your side then you can look out for upcoming trends and capitalise on differences between the currency values. This is like a sneak peek into what will happen within a set time period.
The Pros and Cons of Forex Trading
Forex is very different to most other forms of investing, as it’s incredibly fast paced. With most traders taking just a day to buy and sell, the market can be volatile. With this in mind, you have to dedicate a fair amount of time to it on a daily basis, so it may not suit some traders.
On the other hand, this means you can trade large volumes quickly, as there’s always the demand from another buyer. You can also trade around the clock, as there’s a different day within each main time zone. The market liquidity makes it an easy venture, as you’ll never be stuck with a lot of currency that you can’t sell.
There are many ways to get into forex trading and once you begin, you might just find that it makes you a lot of money. Try this out for yourself if you want to experience the fast paced world of forex.
