JoshIf you want to trade forex as a novice or aspiring investor, you can rest assured that you’re not alone in the current economic climate.
Not only does a daily trading volume of $6.6 trillion highlight the popularity of the forex market, for example, but it’s fair to say that online brokerage sites have made currency pairs more accessible than ever before in the digital age.
In this post, we’ll outline a guide on how to get into forex as a beginner, as you look to learn more about the marketplace and start trading with your hard-earned capital.
- Learn About the Market’s Fundamentals or Different Currency Pairings
To start your journey, you’ll have to develop an understanding of the forex market and its mechanics, particularly in terms of the fundamental rules that drive price changes and fluctuations.
This creates a solid foundation for future and practical success, while creating a keen and much-needed sense of determinism that can negate impulsive, emotive or ill-informed trading decisions.
On a basic level, this also revealed the full range of forex trading vehicles available to you, along with the key currency pairings and the relationship that exists between them.
We’d definitely recommend starting out by learning about major currency pairs, which feature assets such as the USD and tend to trade in relatively narrow and predictable ranges.
- Practice, Practice, Practice
The next step is to bridge the seismic gap between theoretical knowledge and practical trading experience, which often makes the difference between failed and successful investors.
This is where a demo account can come into play, with this available through a licensed brokerage site and capable of offering you access to a real-time but simulated forex marketplace.
You can usually use this for a period of between three and six months, while it provides the ideal opportunity to test and hone your strategies without risking your hard-earned capital.
You should also leverage this opportunity to practice consistently when using a demo account, while experimenting with alternative strategies and gauging their impact on profit and loss.
- Trading with Real Money – Slow and Steady Wins the Race
At this stage, you should be ready to start trading for real, with a capital holding of anywhere between £10 and £1,000 enough for you to get started!
We’d recommend that you adopt a slow and steady approach when starting out, however, and one that adheres to conservative capital limits that are in line with your wealth, trading strategies and underlying investment philosophy.
We’ve already suggested trading major currencies when starting out, for example, while we’d also suggest limiting yourself to just one or two pairs when initially investing in forex.
From here, you can look to scale your portfolio in line with experience and profitability, while also diversifying into other markets and asset classes over time.