Trading forex is an attractive and potentially profitable option for many people to undertake alongside working a full-time job. To become successful requires spending a lot of time researching and planning before taking the plunge though.
Forex trading isn’t for everyone so it is important to consider the many aspects involved and do a few practice runs where possible first. Creating a trading plan designed around your style and aims is essential too. There are a number of vital questions you must answer before starting to trade forex.
1. Which currency pairs?
There are many currency pairs available to trade on the forex market. The most popular seven pairs to trade are split into major and commodity pairs featuring euros, US dollar, pound sterling, Japanese yen, Chinese yuan, Australian and New Zealand dollar. There are various combinations of each variety available to trade.
These all have the largest number of buyers as they are used in countries with strong economies which do plenty of business every day. This does mean the spread is tightest between them all though. A number of smaller currency pairs exist too, such as the Mexican peso, which provide their own benefits.
2. Which forex broker?
Unless you’re thinking of becoming a full-time forex trader then enlisting the services of a broker is required. There are hundreds of options out there, from individuals to large forex firms such as ETX Capital which provide all manner of services.
Choosing an appropriate broker to work with will depend on a number of factors. For beginners seeking out a broker that will provide reliable, professional advice is best. A lot will depend on how much time and money you wish to invest in forex trading and a broker to determine the level of service required.
3. Which forex trading platform?
Modern technology has increased the number of ways currencies can be traded on the forex market. There are various platforms available depending on your lifestyle, with many forex trading companies offering more than one in the same package. Some include free trials which are advisable to get a feel for your preferred method.
Downloadable computer programmes, apps for your tablet and even mobile mean you can trade on the go. For those with a long commute this can be ideal. The same information is usually included in all platforms but the presentation and usability will vary from company to company. Spend as much time as possible preparing and practicing before making your first forex trade.
Takeaway
One last piece of advice: There are considerable risks involved in forex trading. With that said, please understand that losing money in the form of loss is very much possible. In order to control your risks, for a start, please limit your trade to the allocated amount that you are “willing” to lose.
Never, ever go all out in forex trading. As mentioned above, doing so is very much akin to a gambling rather than a sound investment move. Get educated – free resources are everywhere.