No, many people actually rely on forex as the main source of income. To prove this is the rise in the amount of money that is traded on forex market trades on each day.
One can trade on foreign currencies in many ways through the available platforms online. Check out our top rated forex brokers.
Here are 7 simple steps on how to trade forex for beginners:
1) Examine the Trading Position
First, you need to take a look at the trading position of the country you are willing to trade the currency.
For instance, if the country produces many products that are constantly in demand, then there are high chances that the exported goods will help the country make good money.
A boost to a country’s trade in most cases translates into a boost in the value of the country’s currency.
2) Find out on the Country’s Economic Reports
Secondly, do a research on the economic reports of the country in question.
You can find comprehensive information by looking at the country’s GDP reports as well as reports on other important factors like inflation and employment status.
All these are likely to influence the value of the currency of the said country.
3) What Are The Possible Economic Trends?
Predict the economic trends of the country. For instance, should you feel that England’s economy will weaken, then you ought to know that this will cause a negative impact on the EUR, then it will be prudent to sell the EURs in exchange for a currency whose the economy is much stronger and may be more stable.
4) Study the Political Weather
Look at the country’s political climate. Should the country be in an election year, then there are two possibilities.
If the win goes to a leader who has great fiscal agenda then the value of the currency is likely to go up.
In many cases, the new governments will want to make the trading environment friendlier during such times, if this happens more people will venture into the trade markets something that is likely to boost the value of the currency in question.
5) You Will Be Calculating Profits, Learn How To
Learn how to calculate the possible profits. To avoid unnecessary losses as a beginner, then consider opening a demo trading account where you can do calculations using virtual funds.
Profits are calculated by determining the number of pips between a currency pair. A pip is a difference in value between two currencies that are in a currency pair.
In many cases, a pip is equivalent to 0.0001. This means that if a currency pair of EUR/USD moves from 1.354 to 1.356 then your pair has moved by 10 pips.
In order to know how much you have earned, you will need to multiply the number of pips earned from your account times the exchange rate. The result of this calculation is the indication of how much value has been gained or lost by your account.
6) Choose a Trusted Dealer
You also need to be careful as you select your preferred broker or dealer. The company has to be led by professionals who knowwhat they are doing.
We pride ourselves as a regulated dealer with a wide array of products at your disposal. We will also offer demo trading account which will help you in gaining some experience before you trade in real money.
7) Do a Research on the Available Account Types
Get information on the available accounts. Note that you can choose to register for a personal account where your trades are yours to make or a managed account where the dealer will offer insights and make the trade on your behalf.
While still on the account opening details, be sure to inquire about the associated costs such as the cost of transferring funds from a bank account to your forex account.
As proof of the account opened, you can ask for documentation. This can always be sent to you by email.
The next step is to activate your account. This is the final step to you accessing your account. The access link will be sent to you by the broker by email.
Follow the link and all the instructions and you are good to start trading.
Always remain calm, remember to always analyze the market before casting the dice.