Part 11: How to start Forex trading?

With so many FX providers and brokers, it may seem quite easy to enter the forex market. But getting started with foreign exchange trading can be a challenging task for those who are new to Forex. Where to start? What to look for when choosing a Forex trading platform? How to place an order? These are just a few questions commonly asked by novice traders. Here are step-by-step instructions for those Forex beginners who want to make wise decisions when getting started in Forex trading.

Choosing the right brokerage company is the first important step you have to make as a FX beginner. The decision on what broker to choose is personal for each and every trader, but there are certain basics you need to look for when selecting a brokerage company. First off, you should make sure that the company is a reputable institution registered with the Commodity Futures Trading Commission. When choosing a broker, pay close attention to FX trading platforms offered. With so many trading platforms available online, it makes sense to do a comparison between the platforms designed specifically for FX beginners.

When selecting a platform, take a closer look at the minimum account size, stability, account leverage, expert advisors and fees involved. The best FX traders come with such features and tools as automatic live updates, mobile platform capabilities, 24-hour customer service, real-time charts, streaming news feeds, free demo, automated trading capabilities, customized alerts and others.

Once you’ve conducted a list of brokers that fit your needs most, it’s high time to test their FX software. Fortunately, most FX brokers enable you to open a demo account that won’t cost you anything. Demo accounts are virtual accounts that allow you to practice your trading before starting it for real. As the example, we are going to use the eToro trading platform, one of the best trading platforms for first-time FX traders. By clicking the “Practice Trading” button, you will be prompted to the registration screen where you’ll need to fill out some of your personal information.

So, how to make your first trade? First you need to choose the currency pair you’d like to trade. In the section “Trade Options” you can select the level of risk, the leverage and the amount to trade.

You can also set the “stop loss” and “take profit” levels. The stop loss option is designed to limit your losses if the market moves against you. The take profit is the point at which the price reaches a certain level and the trader wants to take the profit and close the position. It’s also possible to modify these limits when the position is already opened.

Once you have set all the parameters, all you need is to click the “Open Trade” button, confirm your parameters and start your trade. If you have set the stop loss and take profit levels, your trade will close automatically. But if, for some reason, you want to exit the trade, you can manually close your position. For this, you need to click the “Close” button and, after confirmation, the closed position will be removed to the history. 

Forex charts are one of the most important components of any trading platform. Again, here you can adapt the representation to your own taste. You can change the chart style, choose the period of representation. In addition to that, you can take advantage of various technical indicators or draw the lines and curves and save the chart on your PC for the future analysis.

Besides from the main features, you can also find lots of useful additional tools and options, including the history of your positions, live Forex rates, the latest news and many others. The key task is to practice your trading skills and strategies as often as possible. While some providers offer unlimited demo accounts, some brokers may limit practice trading to a certain amounts of days (generally 30 days). Keep in mind that the purpose of trading with a demo account is to get you confident making trades with your own funds.

Once you’re ready to trade for real, you need just to select the appropriate section. To start trading for real, you need to deposit money. There are several options to choose from when it comes to funding your account. These options may vary from broker to broker, but the main methods include credit card, PayPal, Western Union and wire transfer. The process of money withdrawal is also quite simple. In case you have a positive balance you can withdraw your funds by using just the same methods, i.e. if you deposit your money via PayPal, you can withdraw it to your PayPal account. All you need is to select the amount of money withdrawal and the method you want to use.

Even though demo accounts work just like real ones, the first live trade can be a daunting task, mostly due to the emotions involved. When it comes to live trading, it is generally recommended to start trading with small amounts. It is also important to stick to your own thought-out trading plan that will prevent you from falling a victim of your emotions. When trading a demo account, take your time to develop your own trading style you’re comfortable with. Once you have a well-designed trading plan and you’re confident with it, you will be less exposed to making mistakes that may cost you dear. In conclusion it’s worth saying that the best way to learn Forex trading is to open your account and start trading!