What Is Forex Trading and How to Start?
Forex is called an international currency market. It is the largest, and its daily turnover exceeds $6 trillion. If we conduct an experiment and combine all the national funds, the Forex turnover is still higher. This proves that stock markets cannot compare with Forex regarding financial turnover. However, FX participants are not only retail traders but also central banks of countries, state investment funds, and independent investors. The average deal size on FX is $1 million, but this does not mean that minimum bids cannot be used here. You can start with a $100 account if you choose an AvaTrade broker or another similar one.
On Forex, you can bet on the rise or fall of the exchange rate, and micro-bets are available here. Such transactions are possible thanks to Forex dealers who invite new participants to platforms where you can earn money by guessing the price changes of a particular currency. You are not able to purchase currency through a dealer. This can only be done through a broker. In this article, we answer the questions “What is forex trading?” and “What should a beginner do to join the process?”. We also tell you how to prepare for your first trade and which broker is the best choice.
Beginning of Forex Trading
The process is straightforward. The trader makes a forecast by choosing one of the currency pairs. If one succeeds in guessing the rise or fall of the currency, the dealer pays the winnings. The set amount is withdrawn from the trader’s account if it does not work out. You can start without a lot of capital and special equipment. A minimum amount (for instance, $100) and a computer with the internet are sufficient. You need to install the program and register, after that make a deposit and start trading on the platform.
You can use a smartphone or tablet (Android or iOC) if you don’t have a PC or laptop. Not everyone succeeds in working on Forex: you need to consider many factors and have the knowledge to make a profit from a distance. Many brokers provide training information for free. For instance, by joining AvaTrade, you can use guides, graphs, articles, strategy descriptions, and other materials for free. You have to study the terminology, know what currency pairs are, and how to use them.
Testing and First Steps
If you are not a qualified investor, you must take a small test. This check allows the dealer to understand your level of knowledge and offer you one of the current programs. The check is free, and anyone can complete it. You need to know not only the principles of FX trading but also to be aware of the risks because you can not only enrich yourself but also lose your funds if you fail. After that, you sign a contract with the dealer and install the client program on your device. In the dashboard, you will see currency quotes from information agencies, brokers, currency exchanges, banks, etc.
The complete list of quotation suppliers is on the dealer’s website. If you make deals successfully, the amount in your account grows. You can withdraw funds only when you have completed all transactions. We remind you that a lot depends on the choice of a dealer or broker, as you must be sure that the service provider is honest and provides a safe service. We recommend contacting only reputable companies, such as AvaTrade.
How to Make Deals on FX?
In a currency pair, the first currency is considered base, and the second one is quoted. We recommend choosing a pair where the dollar acts as the base currency. In this case, you must guess whether the dollar will rise shortly. The problem is that this growth is unlikely significant, so you’ll make a modest profit. Experienced traders often bet on alternative currency pairs, relying on political news and their intuition. In this case, they can earn more but at greater risk. You should remember that you can open a deal “for sale” or “for purchase”, depending on how you think the exchange rate will change shortly.
Features of Forex Trading
There is no need to assume that trading on FX is based on luck, as a trader can rely on forecasts and expert advice, assess the economic situation in various countries, and consider the effects of foreign policy factors. For instance, a change in the price of oil or gas may affect the growth of a currency. You should remember that the dealer charges a commission for the services; pay attention to this when signing the contract and carefully read the terms of cooperation before starting. You should not start trading with large amounts – try to start with a minimum deposit. On AvaTrade, you can start with just $100. You should try to learn and apply several Forex trading strategies and apply them in an actual situation. There are several basic rules: do not use large leverage if you are a beginner, limit the size of the deposit, and use a stop loss to exit the transaction automatically.
