Forex Trading in 3 Steps
Currency trading has become widely popular during the last decade, expecially among the small retail clients. The times when it was only available to large institutional investors are long forgotten. Now everybody with an access to internet can open an account and trade directly from the screen. Before start trading traders should know the core of the Forex market. Here is a good article of what is Forex in brief. The most important is that it is traded on leverage and the market functions 24/7. Traders can trade around the clock and with just a small amount of money.
To start trading there are just 3 simple steps to follow: choosing the broker, choosing the instruments and open a live account.
Choosing the broker
There are many factors to consider when choosing a broker. First of all it has to offer a user friendly and yet powerful platform. The most wide known platform by far is Meta Trader 4 which is also used by most of the brokers. Meta Trader 5 is coming up, however it is not so widely used yet. Other platforms are also available for more sophisticated traders. The most important is to understand it and feel it handy. When choosing the broker traders may also look the regulation of the broker. It can be either not regulated, regulated by off-shore countries regulators such as BVI and Mauritius and then strictly regulated by world famous regulators such as FSA and NFA. The account opening is easier with less regulated firms but the funds security is a question. To be sure of their funds and overall good client experience traders should opt for FSA or MIFID compliant brokers.
Choosing the Instruments
What is traded on the Forex market? It is mostly currency pairs. For example the EUR/USD is the most traded forex pair in the world with nearly 80% of the total volume. Next are GBP/USD, EUR/JPY and so on. There are 8 (eight) currency pairs considered to be majors and all other pairs are crosses between them. For example, GBP/SEK (Pound against the Swedish Crona) is a cross between GBP/USD and USD/SEK – that is how this currency rate is created and can be traded as a separate currency pair. For novice traders is best to choose a pair with high liquidity, such as EUR/USD since the spread is lower and the execution instant.
Opening an account
Nowadays, it is easy to open a Forex account in 5 minutes. Individual traders need to just submit some ID over the email and they have access to the world markets in few minutes. The forex brokers usually require a minimum amount to open an account between $100 and $500. Some even don’t apply any minimum and one can start trading with just $10.
Processing your request, Please wait....
