Modern foreign exchange trading has been around since the 1970s, and it has seen many market trends come and go. New innovations and regulations have changed the forex market in recent years, but it still attracts a large base of traders globally. This can largely be attributed to the fact that, despite the inherent risk involved, it is still the biggest and most liquid asset market in the world.
If you’re interested in trying your hand at forex trading online, it’s important to follow some key steps to ensure your entry is as smooth as possible.
Consider the Forex Market You Want to Focus On
An important part of the initial research you have to do before diving in is to become familiar with the different ways that you can trade forex. Investopedia’s article on forex trading education breaks down the three markets to deal in: spot, forwards, and futures.
In their rundown, it’s noted that only the spot market has actual currencies bought and sold. This makes it the popular most type of forex trade. Forwards and futures markets, on the other hand, deal in contracts that simply represent claims on currency types and are for future settlements. The terms of the agreement also vary depending on what you choose to focus on.
Set Your Starting Capital
Though it’s quite easy to actually open an account to start forex trading, you don’t want to trade without a starting capital. In The Balance’s guide on setting a day trading capital, the factors that determine how much capital you want to set aside are how much you can afford, ensuring you don’t risk more than 1% of your forex account, and managing the various risks that come into the picture.
Calculate different amounts based on your account total to find your happy medium, and make sure that you are planning for a future-forward plan over a “one time, big time” deal that could result in complete loss.
Choose Your Trading Platform
Each trading platform has its own features and systems. What you want is to pick the right fit that matches your trading style, has an easy interface to use, and has stable operations. FXCM’s guide to forex trading platforms highlights the growing number of platforms for traders and how they cater to different types of traders. For instance, Trading Station wins in terms of platform tech because of its accessibility and advanced features, whereas ZuluTrade is a great platform that caters more to traders that want more automation.
Though you don’t necessarily need to have a broker when you do individual trading, it’s a good idea to at least check what options you have. Some trades can’t be done without a broker, especially in major deals. Plus, they can give you a resource to bounce your plans off of. However, direct access trading means you don’t need that extra party. Keep in mind, though, that a broker can be your crucial ally if you are risk-averse.
These steps should help any starting trader map out their first trade efficiently. The Economic Times’ forex rates tracker can be a useful resource in making informative and timely trades. So keep your eyes peeled for forex value changes and global events that can influence the price of your preferred currencies.
