How To Start Forex Trading

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Trading Forex means understanding the art of short term speculation through selling and buying different currencies against others.


At ForexSQ we care about traders’ education, thus we remind people that Forex trading is far more risky than you can imagine when you first come to it and could bring large losses for the newbie. Why not? All the promotional surrounding FX trading suggests that it’s a simple way to double, triple your money from the comfort of your home and with little effort.

But that, obviously, is not true. Actually, anyone can come to be a profitable Forex trader, if he/she pays the price: study. To become an engineer, a doctor, a lawyer, or any kind of profession for that matter, it is essential to spend years learning. Why would you think that you don’t have to do the same to become a successful trader?

Forex trading is established by the foreign exchange market, which has no physical place. It’s the outcome of international transactions performed by commercial business, banks and central banks, which means it is active 24 hours a day and 7 days a week. If you are fresh to FX, you may hear that is generally called an OTC (over-the-counter market) which means that trading  is done openly between two parties, without any regulation of an exchange, though that is not absolutely true. To trade Forex, you use a brokerage firm, generally called just the “broker,” that grants you access to this international net.

Marketing Forex brokers offer trades with access to this market by means of a trading platform that permits them to sell or buy a certain currency against another. Actually, these days, brokers provide much more than just currencies, adding indexes, commodities, and other assets to their stages, to provide their customers with more investment facilities. They charge a small commission for their service, over the spread between the prices of selling and buying. There are numerous brokerage firms, with different degrees of consistency or reliability, although it is good to know that as time goes by, there are fewer scammers around, and that several countries have regulated Forex activity to protect broker’s clients.

One of the main advantages with Forex trading is the use of leverage. The use of leverage suggests the prospect of having an important increase in returns when taking a certain investment position, but obviously, the losses can also be as large. Simply, it means that you can purchase certain assets, by using a smaller amount of money than it’s worth. For instance, if a broker delivers a 50:1 leverage, also called a 2 percent margin requirement, it means that $2,000 of equity is essential to purchase an order value $100,000.

The selection of the correct broker is as appropriate as educating yourself before jumping into this activity. Brokers not only provide different assets, but also provide different leverages, and have various minimum capital necessities. When you select a certain broker, the firm creates a separate account in your name in their company, where you have to deposit or credit your money to trade. Some permit you to open accounts with just $500, whereas maximum required $10,000 to open an account.

It could be actually profitable, but you should not forget this is speculation, and the risk associated with it is quite important. However, again, performing an open heart surgery is not what you could call easy, even for an expert surgeon. As with any profession, practice makes perfect.

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