Anyone can set up an account with an online broker and begin trading forex. It is a good idea to at least learn the basics of how to trade currencies before you do so.
Don’t feel you need to spend years learning everything there is to know about currency trading. Most traders will tell you that their knowledge has come mainly from experience. Equally, you don’t want to throw money away because you hadn’t learnt how to trade currency pairs, or what “currency pairs” even means. You might also want to choose one of the trading platforms which allow you to trade on a virtual money account.
Currency trading for beginners
When you trade on the foreign exchange (“forex”), you don’t just buy a single foreign currency, although there is the option to purchase bonds in a currency. Most traders are interested in trading currency pairs. If a trader believes the US Dollar will become more valuable than the Japanese Yen over a given period, for example, they will bet on the dollar going up (“long”) and the yen going down (“short”). The dollar may therefore rise in a day against the yen, but fall against the British pound and the euro.
By narrowing the price changes to pairs, you create hundreds of active marketplaces and essentially win twice (by longing one currency and shorting the other) because you are betting on twice as much movement. Some trading platforms will allow you to “leverage” more money to increase potential returns by creating a CFD (“contract for difference”). This is essentially a bet on a currency pair between you and your broker. The question is, how do you know which currency pairs to choose?
How to trade foreign currency
To give you a rough idea, a beginning to end trading strategy might look something like this. Choose an investment style which suits you. Are you looking to make a large amount of money over the long-term or lots of smaller amounts of money over the short-term? Your approach will have a big impact on the time you spend doing it so think carefully. Next, get yourself up to date with forex market news and analyze currency pairs using indicator tools. If the signs look good (the number of “signs” you need is debatable), then buy, but don’t put all your eggs in one basket.
There’s one more vital step you need to take. Knowing how to trade currency is pointless without an online platform to trade on. To recap, you will need to find a platform which offers forex market trading and, ideally, the option to trade on a virtual money account (so you can learn without risking your money). The broker should have a number of market analysis tools available for you to use. You will want a place with low commissions on trades and, of course, a solid and trustworthy reputation. Fortunately, TradeOr has all of these features to offer, alongside its excellent track record within the industry.
Learning how to trade currencies may seem like a daunting prospect. You should quickly be able to progress from “currency trading for dummies” to trading for real with the right online brokerage. TradeOr has a whole host of features and functionality, including a range of software to help interpret market data. They have a fantastic reputation, technical assistance, as well as a team of financial experts on standby. TradeOr offers CFDs to leverage your investments, zero commissions, and they have a “demo account” so you can build experience without any risk.