Forex is a combination of two words- Foreign Currencies, currency tokens, and Exchanges.
In the last few years, Forex Trading has emerged as a credible way for traders to make money by trading foreign currencies. This is usually done for any of the following reasons-
- For trading purposes when businesses deal with export or import functions
- To further economic interests by betting on falling or rising currencies with a brokerage firm such as eToro
- Facilitate and promote travel and tourism in different parts of the world
This is a huge market, with the World Bank estimating that more than 7 Trillion Dollars being moved every single day in 2020!
The Foreign Currency market is considered the most liquid asset in the world. Currencies change hands for several different reasons allowing traders to bet on this asset class and gain significantly when they increase or decrease in value.
In this resource article, we are going to look at the best Forex trading platform for beginners. If you are interested in learning more about how the world’s forex markets work, you should stick around till the end of the article.
Forex Trading: What does it mean?
The first thing that you need to understand and be aware of is how does this trading actually work. Most people are under the misconception that trading forex is similar to buying and selling stocks and shares. That is not the case.
According to leading financial experts, forex trading is always done in pairs. In other words, when you buy one currency, you are selling the other one. Additionally, you do not need a DEMAT account for trading currencies. What you need is a Currency Trading Account.
One of the main reasons why traders get into Forex trading is to diversify their investment portfolio. This means that in addition to picking up stocks, shares, real estate, or precious metals, forex allows traders to add a new dimension to their portfolios.
You should also know that as against nationalized stock exchanges, the forex market is decentralized. This means that the entire ecosystem operates in several different places, regions, and countries, all at the same time.
London, New York, Singapore, Tokyo, and Berlin are some of the forex trading hotspots. If you want to increase your reach and presence in these international markets, you need to look for an international broker that allows you to trade currencies internationally.
How to Start Trading in Forex: 5 Steps you need to follow
In this section, we are going to list down five important steps that can help you start trading in foreign exchange and currencies-
Step 1: Open a Trading Account with a Reputed Forex Broker
Tons of broker platforms claim to be the best as far as forex trading is concerned. However, as a beginner, you need to do your research and find out as much about the platform and broker as possible. Read online reviews and ratings and explore the pros and cons of the various brokerage platforms. Once you are certain about the credibility, you can go ahead.
Step 2: Make sure to submit all the Documents and other Formalities
Different countries have varied requirements as far as opening a forex trading account is concerned. Make sure you are following all the necessary protocols in this regard. You might need to complete the KYC obligations and formalities. Updating details of your bank account, attaching your income tax and social security numbers might also be required.
Step 3: Deposit the Minimum Amount required for making the account operational
Almost all the broker platforms in forex trading will request you to start with a minimum deposit. You need to think of this as an account opening kind of a deposit. If you are conscious of depositing a large sum of money, you need to check for brokers that accept a minimum balance. As a beginner in the field, you should ideally start slow and then scale up.
Step 4: Gain as much knowledge and information on how the Forex Trading Ecosystem works
If you are a beginner, you need to brush up on your knowledge of forex trading. This means taking help from credible and informative platforms that can help you understand how the ecosystem works. Most of the leading broker platforms have extensive resource sections that you can take help from. You can also refer to YouTube videos to learn more about the tips and tricks.
Step 5: Understand how Buying and Selling Positions in Forex Trading
When trading in forex, you need to understand two positions- the buying one and the selling one. This is because every time you make a trade you need to be in a beneficial position as regards both the currency points. If you are expecting that one currency is going to decrease in value, that becomes your selling position. The one to rise will be your buying position.
Choosing a Forex Trading Platforms: 5 Things to watch for
In this section, we are going to list down five things that people looking to start trading in forex need to look for-
- The first thing that you need to spot is the ease of use and friendliness of the problem. The easier the platform is, the better will you be able to become used to the same.
- Secondly, you need to look at whether the platform comes with an app that can help you with 24×7 updates and notifications. This can help you make important trades.
- Thirdly, there are brokerage platforms that help you by creating mini accounts. This is a low-risk kind of investment approach that protects your interests at the start.
- Fourthly, some platforms allow you to earn some form of passive income. One way they do this is through Copy Trading. You can mimic the trade of others.
- Lastly, you need to opt for platforms that help with providing bonuses to their members. These bonuses can be very useful and prevent you from investing your own money.
The Final Word
In this article, we have looked at some important elements for beginners looking to start forex trading. If you would like us to discuss any more points on the topic, please let us know in the comments section below. We will be more than happy to assist you and clear all your concerns and doubts as possible.
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