The global pandemic has brought remote income streams to the forefront. Forex lets anyone make money from the comfort of their home using any internet-connected device. This market has never been more accessible, but success requires an in-depth understanding of the foreign exchange, persistence and emotional control. Here are the basics.
How Trading Works
The goal of every trader is to make a profit by buying and selling currency at the right time. Forex brokers offer dozens of pairs that are classified as Minor, Major, or Exotic, depending on their elements. Any instrument can be profitable if you learn forex trading step by step and understand how its tools move.
For example, EUR/USD shows the value of one Euro in US dollars. Here, the euro is the “base currency” while the US dollar is the “quote” currency. If the euro gains value or the dollar depreciates, the price goes up. Every Ask and Bid price (for buyers and sellers, respectively) reflects the health of the underlying economies. So, how does one get started?
1. Find a Broker
You need an intermediary to connect to this gigantic market with a turnover of 6.6 trillion US dollars. Choose a company that is licensed and has a positive track record of success. Brokers may be authorised by the FCA in the UK or entities abroad, such as the CySEC (Cyprus Securities and Exchange Commission). Compare professional reviews and feedback from real traders.
2. Educate Yourself
Learn as much as possible about the market and different currency pairs. Your broker will provide basic guides for technical and fundamental analysis and overviews of popular strategies. There is a wealth of information in other sources, including YouTube.
Choose websites and channels set up by real financial experts. Learn about the market opening times, risk management tools, and trade opening principles. Compare popular strategies, such as day trading, scalping, and swing trading.
3. Use the Demo Mode
Apply theory to practice. Register a demo account with the broker (this is usually free). Practice analysing the charts and opening trades using virtual money. On average, traders should spend 2-3 months in the simulator. Remember that real trading will feel different, as you will use your own capital.
4. Start Small
Focus on the pairs you understand best. The minimum deposit requirement depends on the broker, but you can usually get started with $100 or less. Never use over 1% of your deposit per trade, and always limit the risks using Take Profit and Stop Loss. These tools trigger automatic execution when a particular price is reached, so you do not have to stay glued to the screen all day.
5. Monitor Progress
Start a trading journal and note down key details of every position. These include the amount, the instrument, volatility and liquidity assessment, your motivation for the trade, the entry and exit price, and the result. Review progress weekly to make sure you are on the right track. Good luck!
