What you need to know before you start trading in the popular financial market.
“Forex” is a popular financial market for novice traders. Such a choice is understandable: unlike the same stocks, here is a fairly low entry threshold – to trade on the “Forex” is possible already from 500-1000 dollars and at the same time to receive on it a tangible income. On the other hand, brokers, which have become very numerous, not all are trustworthy. How to find a good dealing center and where to start trading on this market?
Searching for a broker for forex trading
What a dealing center should have in order to be trustworthy:
- sufficient period of being on the market (should provide its services for at least several years);
- A wide functionality (all the necessary indicators, etc.);
- a proven terminal (it is better if it can be downloaded, such as MetaTrader);
- a qualified and professional support team.
For example, in order to open a “forex” account, a company such as Saxo Bank is well suited. It has been providing services to its clients for many years and is more suitable for professionals. However, even a beginning trader may work productively with this broker if he or she wishes.
Searching for a Trading System
There are plenty of trading systems and strategies, which are applicable to the currency market. Some of them are universal (they can be used in other financial markets), but most of them are applicable only for currencies.
To find your trading system, you will have to search for a long time – it must meet a number of parameters in order for you to work successfully with it.
These are:
- A sufficient set of currency pairs suitable for it;
- a convenient indicator or clear rules for price action;
- possibility to apply it on your terminal;
- a sufficient amount of funds for it.
The last point relates to the observance of money-management: each transaction requires a certain amount of money, which is put in a stop-loss. This must be the amount of money you can afford to lose in one transaction. The same amount should be calculated for one day of trading: if on that day in a series of unsuccessful trades you lose this percentage (for example, 10%) of the deposit, work for the day should be stopped out. The standard values for money and risk management are 1-2% for one trade and 5-10% for one day.
Deposit
“Forex is so attractive to novice traders because of its relatively small deposit. If for comfortable work with shares of the companies one should have several thousand dollars on his account, then the currency market allows to begin from 500-1000 dollars. Some dealing centers offer the opportunity to begin with a much smaller amount: even up to $10, but it must be understood that comfortable work with such an account is impossible – unless it is not cent.
However, starting with a cent account is not the worst option. This will be a good way to get used to the broker, the terminal and the trading system rules. It’s worth noting that it’s impossible to earn any tangible amount on such an account.