Trading foreign exchange, or forex, has never been more profitable. With the right knowledge, tools, and strategies, you could earn a good income from just a few hours of trading per week. Live forex trading can be complicated, but it doesn’t have to be. Follow these beginner-friendly tips to learn how to start trading successfully.
- Set up your trading platform
- Understand exchange rates
- Learn basic forex terminology
- Determining your trading strategy
- Final Note
It’s best to start by setting up a trading platform because it will help you picture the whole idea of live forex trading.
Set up Live Forex Trading Platform
First, you’ll need a trading platform to connect to your broker. There are several different ways to set up a trading account, so make sure you’re aware of what options are available to you. If you already have an account with a broker, you can sign up for an unlimited demo or risk-free trading account to help you get started.
Setting up your trading platform can be a daunting task, but with the right tools, it can be a breeze. Below are some powerful tips to help get you started;
- Choose a platform that is user-friendly and intuitive.
- Choose a platform that offers a variety of trading tools and features.
- Choose a platform that is secure and compliant with international financial regulations.
- Choose a platform that offers 24/7 customer support.
- Choose a platform that offers a variety of payment options.
You can also open an account with a discount broker such as Interactive Brokers, TD Ameritrade, or Vanguard. If you don’t have any experience with trading, it’s always best to start with a discount broker. Most brokerages offer a variety of no-cost trading resources, including education and mentorship programs. You can also sign up for a trading platform like Robinhood that doesn’t charge any fees.
I recommend you start with Traders Union. It helps simplify everything about live forex trading. Also, you can find exchange rate information for better understanding.
Understand Exchange Rates
Secondly, When exchanging currencies, it is important to understand how the exchange rate works. Exchange rates are the rates at which different currencies are exchangeable. Supply and demand are the major determinants of exchange rates.
The more people want to buy a currency, the higher the exchange rate will be. The more people want to sell a currency, the lower the exchange rate will be.
Economic activity, interest rates, and other factors can also determine exchange rates. You can check the current exchange rate for any currency on some financial sites. You’ll also want to keep a close eye on the chart to know when to get in or get out of a position. e.g. at xe.com.
Another guide to help you out with live forex trading is to understand forex terminology.
Learn Basic Forex Terminology
Thirdly, Forex traders often use unique terms to describe forex trading. To avoid confusion, it’s a good idea to learn the basic forex terminology. Here are a few essential forex terms that you’ll want to remember:
Live Forex Trading Terminology
Currency: A specific government-issued currency.
Pair: The pair refers to the two different currencies that make up an exchange rate. For example, USD/EUR would be the USD/euro exchange rate.
Code: A currency contains a three-letter code.
- USD – United States dollar
- CAD – Canadian dollar
- EUR – euro
- AUD – Australian dollar
- JPY – Japanese yen
- NZD – New Zealand dollar
- SGD – Singapore dollar
Indicator: A tool that shows you where the price of a currency is likely heading.
Trading strategy: A strategy that involves buying and selling the same currency pair at different times.
The term trading strategy undoubtedly needs more explanation.
Determining Your Trading Strategy
Also, once you understand the basics of forex, the next step is to determine your trading strategy based on your goals and risk appetite. Forex trading strategies can be broken down into four main categories: trend trading, swing trading, position trading, and scalping. You can use any of these strategies to make your first few trades.
Trend trading is ideal for investors who want to own a basket of currencies that are trending in the same direction. It’s ideal for investors who want to use a long-term strategy. e.g. long EURUSD for more than a month.
Swing trading is used to take advantage of short-term and long-term price movements. It involves investing in a basket of currencies that move within a range of about 1% or less each day. Not a rule of thumb though.
Position trading involves the long-term holding of a certain amount of a basket of currencies. It’s best for experienced traders who want to make consistent gains.
Scalping is used to capture fast movements in forex. It involves investing in a basket of currencies that move less than 1% each day.
Conclusion
Finally, live forex trading is profitable, with the potential for huge returns and little risk. Learn about forex risk. The only downside is that it can be tricky to get started, but with a little patience and dedication, you can make big bucks in no time. With some practice, you can become a profitable forex trader in no time at all.
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