How to Trade Forex – Step by Step Guide to Forex Trading
In order to trade currency or forex on the internet, you are first going to require an internet based FX trading account and your job is to guess which way the value of your chosen currency is going to go and how much it is going to vary compared to a different foreign currency.
Hence, basically, it is the comparison between two different currencies done via an internet based forex account.
If your predictions turn out to be right, you are sure to get a profit, while if not, then a loss is what you will be facing, which is why it is really important to understand the risks involved.
Start by Choosing a Broker
Throughout your career as a forex trader, you will have to buy one currency and then sell another currency. If you are a trader based in the UK and are trading a currency online, you will be required to select a certain ‘currency pair’. For example, if you know a fair bit about the values of USD and JPY and you believe that USD’s value might increase more in the near future compared to the JPY, you might want to go ahead and buy USD against JPY. If this prediction of yours turns out to be true and the value of USD does increase compared to Japanese Yen while your trade is still active, you are sure to get a profit. However, if the prediction fails to be true, a loss is what you will be facing.
GBP, EUR, JPY and USD are some of the most widely traded currencies in forex markets all around the world. There exist a wide range of benefits and numerous advantages of using online forex trading services. For the traders based in the UK, one of the most significant advantages is that you have the chance to trade ‘on margin’ whenever you wish to. This also means that in case there is a little bit of an excess of capital stagnant in your forex trading account, you can claim a position for the same.
Let us understand this with the help of an example. In case you wish to trade £10,000 between the currencies GBP and USD, the extremely low margin of 2% requires you to possess only £200 as the capital. Many experts do believe that in case your predictions go wrong and things don’t seem to work your way, you may need to have the entire amount as well as any losses which you may have faced, that may be obtainable to reimburse your trade.
What should you keep an eye on while searching for the best online forex trading platforms?
In order to carry out forex trades online, you require a dedicated forex trading account, and to get one, you need to choose a good forex broker who you can provide you one with a lot of amazing features and quality services. It may be a challenge to look for that perfect forex broker and figure out which one is the best online forex trading platform for you. However, the following three major factors are something which is going to make it much easier for you to look for the right brokers and trading platforms. Here’s what you need to check:
- List of the types of online currencies the trading account allows you to deal with.
- The range of offers regarding frequency and accommodated currencies set by the broker.
- The degree of spreads that the broker charges the traders.
How the broker allows you to manage your account
It would be your responsibility to figure out exactly which kind of account you wish to go for prior to making any other decisions. There exist a number of ways in order to carry out forex currency trading online where various contracts exist for betting forex trading with spreads, difference forex trading and traditional forex trading.
You will need to pay heed to how you will be trading and using the forex services. You should keep in mind that choosing a superior forex trading account which offers several perks and features is surely going to allow you to do this. Yet another aspect you will have to check is whether the broker pays in comparison to the ‘spreads’ that the rest of the brokers charge for the particular currencies you wish to trade on. You will always find narrow spreads with the best online currency trading accounts because that is exactly what enables forex brokers to make money.
Finally, there exist a number of brokers who impose restrictions on the number of available tradable currencies. This is definitely something you do not want, as it negatively impacts your freedom to trade the currencies of your choice, so you should avoid brokers who offer very limited currencies to trade on. Before you apply for a certain forex broker, always go through their promotions and conditions as it lets you understand what you are putting yourself into.
Most of the times, brokers understand the need to offer a wide range of tradable currencies and do offer many popular currencies. However, if you wish to go beyond the exotic then the services, features and options provided by your broker are probably going to stay limited and restricted.
To conclude, you must understand that as a forex account holder, it is your job to manage your forex trading account. There exist a number of forex brokers who never fail to impress, offering a variety of features and services, allowing you to trade well and manage your account without forcing you to pay any extra charges for the same, and those are exactly the type of Forex brokers you need to go for.