How to get started trading forex online
For the novice forex trader, the first question to ask is, what is forex? The forex or currency trading market is the largest financial market in the world with an estimated $4 trillion traded daily, dwarfing the daily volume of any global stock market exchange. In the past, forex markets were available only to large corporations, governments, central banks and hedge funds but the creation of the internet in the mid 1990's made it possible to trade currencies electronically, anywhere in the world, 24 hours a day, with no physical exchange needed. The easily accessible internet spawned the birth of online trading which now offers even the smallest trader access to the forex financial market place.
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The first step in getting started trading forex is to learn as much as you can and familiarise yourself with the exciting world of forex trading. This is easy because there is a wealth of free information about the forex markets on the internet that can be accessed with a simple web search. An easier and more convenient way to learn about the forex market is to go to the website of a reputable forex broker. Many well-regarded forex brokers like easy-forex® provide an array of free online trading tools. easy-forex offers forty educational videos, as well as training tutorials, trading seminars, technical analysis packages, commentary and analysis all accessible at www.easy-forex.com. The easy-forex website also offers streaming news coverage and a forex e-book which is an excellent downloadable overview of the forex markets.
The next step is to choose a professional broker and an easy-to-use trading platform. The easy-forex web trading platform allows you to trade from anywhere in the world with a simple click of the mouse. This is a major benefit because the forex market trades 24 hours a day; from Sunday night GMT to Friday night GMT. The easy-forex trading platform is highly regarded and you can choose to trade via the web, on your desktop or from your smartphone. You can also speak directly to a dealer or account manager via phone, email and Live Chat, who can inform you about the markets and, if you like, help facilitate your trades.
Once you've chosen a forex broker, the next step is to start the registration process, which at easy-forex is simple, just register online for our trading platform and complete the process by entering an initial deposit of as little as USD 25. You can make a deposit with your credit card, a bank transfer or via an e-wallet. For the true beginner, easy-forex offers a free demo account which requires no deposit of funds. The demo account will help you learn and get the feel for what it's like to trade forex before you invest real money. At easy-forex we also offer a monthly demo challenge whereby we award generous trading credit to the top three traders practicing with an easy-forex demo account.
Getting started trading forex is easy and if you keep learning, training and practicing through a demo, you will quickly feel confident to move to trading a live account.
How to enter and exit a trade
There is no universal rule to determine when to enter or exit a trade. Some traders rely on trading systems; others use technical or fundamental analysis or a combination of both. Even the world's most successful traders don't know exactly when to enter and exit a market but there are number of steps that can be taken and tools used to try and identify the most ideal time to enter the market and how to exit the market, maximising profit and minimising potential loss.
It may seem obvious but the first step is to identify the market that will be traded. Each market has its own unique characteristics and these characteristics must be understood to determine the best strategies to use when trading. Next, the trader should determine whether entry and exit decisions will be based on technical analysis, which uses past price movement to predict future price direction, or fundamental analysis which incorporates economic and political news to determine whether a market is over or undervalued. Technical analysis is the most widely used tool in the currency markets.
Third, have a general plan of action that includes tools that will help determine potential entry and exit points and establish guidelines for risk management. These tools include charts and technical indicators that help identify market trends and support or resistance levels. Support and resistance levels will be the primary points to enter and exit a trade. Once you establish these levels and the market reaches them, you can enter the trade.
After you have entered your trade, apply guidelines for risk management. As general rule of thumb, enter a stop loss at the time of opening your initial trade and risk no more than 2% of your capital on any one trade. The 2% rule is not set in stone and should be adjusted to match a trader's risk tolerance and the conditions of a given market .The goal is to live to trade another day by limiting the potential loss when wrong, and to maintain enough capital to capture a profit when the market is moving in your favour.
The final consideration is when to exit the market. A major axiom for successful trading is: Let profits run and cut losses short. While this is easier said than done, placing stops will help limit initial losses. The use of trailing stops can also help minimise the amount of profit given back to the market. Finally, the trader can use use technical tools like moving averages, Fibonacci retracements, and overbought, oversold &sentiment indicators to identify and set a price target at which to exit a trade.
Disclaimer: Forex trading involves substantial risk of loss. Do not invest money you cannot afford to lose. The information provided is for informative purposes only, and can under no circumstances be considered as a recommendation to engage in any trade
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