How To Start Forex Trading?

This is a question that I get asked fairly often. In reality the answer is that it can be as simple or as difficult as you want to make it.

The basics of trading Forex are pretty simple, you are looking at a chart showing the current relationship of one currency against another. All you have to do is decide which currency is stronger and whether that strength will move the market upwards or downwards.

 

How hard can that be?

Of course, Forex trading is not as easy as that, simple and easy do not always mean the same thing.

 

Essential Items Required To Start Trading Forex.

Before you get going with your trading activity you will need a few essentials. You will not be surprised to know that one of them will be money!

Although it is true that you can begin trading with an online trading platform for very little outlay, realistically to give yourself the best chance of success you are going to need at least $500 preferably nearer $1000. There are tools you can use to limit your exposure to sudden market changes and you should always have a limit on any potential losses before you place any trade.

You do however need a bank to begin with to allow you to trade with less stress and worry of running out of cash. One thing you do not need to be doing when trading is worrying.

You will also need a platform to trade on. There are many of these around some much better than others. I personally use IG Index but it would serve you to do a little research and find the one with which you feel most comfortable.

This online platform will allow you to open an account, subject to some checks of course, and provide you with more options to trade, or spread bet as it is officially called, than you will ever need. We are only interested at this time with trading the Forex market.

You now have access to the price charts within your online trading platform. These charts can range from time periods of seconds to days or months, you decide. Whichever time period you choose will be represented by one bar or candlestick. These move up and down reflecting the price movement as shown on the chart below.

 

Other Factors to Take Into Consideration.

This is the point where you as a trader can complicate matters a lot. There are a million and one bells and whistles which you can use to ” help” you with your trading decisions.

Do you use Fundamental Analysis, Technical Analysis, Volume Price Analysis, a mixture of them or none at all?

Do you follow trends? Take notice of Government announcements regarding interest rates, employment figures or another of the many factors which can affect the price movement?

Many of these tools are added to the charts, again to “help” you with your trading decisions. Look at the chart below to see how complicated things can soon begin to look to the inexperienced trader. Lines running all over the place with no apparent connection to the chart.

 

I hope that you are beginning to see how quickly the whole thought of trading could be overwhelming.

My suggestion is that when you first start you will need very few additional tools. You can choose one method of analysis to help your decision making.

Don’t Let All of This Put You Off Trading Forex.

Trading Forex can be a wonderful, exciting but sometimes frustrating experience. At times you will feel as if you can do no wrong, every decision seems to work out well and all of your hard work pays off. At other times you will definitely feel as if the market is picking on you personally and heading opposite to you on purpose out of spite.

You have to take the emotion out of your trading!

You cannot control how the market reacts. You can only control your decision making. Do your due diligence, use the tools and strategies which you understand on a consistent basis and trade with discipline not emotion and you will be rewarded many times over. Nobody gets it right every time and you should not expect to do so either.

As your experience grows you will learn tips and methods to take advantage when the market moves in your favour and how to limit your losses when it doesn’t.

This is not a get rich quick way to make money, more of a serious hobby which, when done properly can be very rewarding both financially and mentally.

Filed under: Forex Basics

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