Forex trading has become very popular of late. There are plenty of disgruntled stock traders who have had enough of the ups and downs of the stock markets and who are looking to invest their money elsewhere.
Although trading Forex does sound easy it isn’t. There are, of course, certainly people that are making a lot of money in Fx markets. These are not investors who have just gotten off the boat and have a bit of cash to burn. Those that make money in Forex are the ones who invest time and effort in knowing what Forex is all about and who then move forward.
Start with Forex Basics
Like all things in life, you have to start with the basics. Forex basics consists in learning about Forex markets, how currencies are traded and what affects their price movement is the first step in trading Forex. And there really is quite a lot to learn.
There are many online tutorials offered by brokers that teach the Forex basics. There are also more extensive Forex courses provided free of charge by independent firms. Without a clear understanding of Forex, you have no chance of coming out successful.
When you feel you have mastered the basics of Forex, your next step is to open a demo account with a recommended broker. Choosing a broker that meets your goals and personality may take some effort. There are hundreds of online brokers that claim to be the best of the bunch. Consult with a few experienced Forex traders and do your own research. Compare the features of several brokers and see which one offers you what you need. There are also online Forex broker review sites which do the comparison for you and these are worth reading.
Once you have settled on a broker, open a demo account for several months. Demo accounts provide you virtual money to use for trading. You trade live but without the risk of losing your money. These accounts give you the time you need to experience Forex trading upfront without the stress associated with real trading.
Another option offered by some brokers is the mini account where smaller amounts of deposit are required. Instead of depositing $1000 or $5000, with a mini account you can start trading with as little as $500. Although the risk of losing too much money has been eliminated, I believe the experience gained by trading in a demo account is much more valuable than moving straight into a real account, albeit a mini one.
While trading in your demo account, you should be developing your own personal trading system. Make it as simple as you can and then test it to see if it works. If not, move on to another one. Keep in mind that you will probably lose much more than you will win. About 80% of beginner traders lose all their money during the first few weeks of trading.
With some experience under your belt, you can move from Forex basics to more advanced Forex tools which will help you be more successful. So be patient and don’t get emotionally involved. Forex trading can be profitable but it isn’t as easy as it looks.