Basics of Forex trading
Since the creation of Forex, in 1976, it has evolved from a platform for foreign exchange trading into a source of influence in the field of economics and finance. Exchange rates vary depending on ongoing economic processes, however, Forex itself simultaneously affects the economy. This is due to the fact that there is an exchange of capital on a global level.
Work on Forex is based on the difference in exchange rates. With a sufficient amount of investment in the purchase of currencies, earnings here can be quite serious. And that is why the number of people who want to try themselves in this area is constantly increasing.
Where to start?
From a technical point of view, in order to start working on Forex, you need:
• learn the basics of Forex trading;
• choose a reliable broker;
• open a trading account with a broker;
• install a trading platform on your computer;
• conclude the first transaction by making a forecast of currency fluctuations.
Successful transactions cause an increase in the trader's deposit, and unsuccessful, on the contrary, reduce its size. The positive difference between the outcome of successful and failed trades adds up to the trader’s income.
Where to get knowledge?
There are a lot of sources of useful information about the rules for bidding. To start a trader, a certain amount of knowledge is absolutely necessary. The basic concepts of Forex trading can be obtained:
• with a broker;
Most often, brokers, taking care of the emergence of new customers and the professional growth of traders, conduct customer training. But at the same time, independent training and development are also important. For this, the following can be used:
• subject literature;
• articles, reviews, sites;
• lectures and seminars;
• video courses.
How to choose a broker?
The question of choosing a broker is quite capacious. That is why on our resource a separate article is devoted to it. In general, we can say that several factors are fundamental:
• honesty and reliability of the broker;
• favorable conditions for cooperation;
• comfortable conditions of cooperation and quality of service.
In order to be able to evaluate the broker for each of them, you should study the opinion of real clients of this broker and its assessment from authoritative sources.
Analytics and Forecasting
The key skill of the trader, which allows him to conclude profitable trades, is the ability to analytics and forecasting. Of course, there is a theory that considers exchange rates unpredictable and turns Forex trading into a kind of gambling. However, the implementation of medium- and long-term strategies based on it is impossible; it works exclusively on short-term charts.
For the effectiveness of concluding long-playing transactions, a trader needs to understand the processes taking place in the world economy, the interactions that exist in it, the impact of the political situation on exchange rates, and much more.
An understanding of the basics of technical analysis, that is, a methodology that examines the movement of currency prices over past time periods and studies existing trends, will also be useful.
The most common mistakes and how to avoid them
At the beginning of the journey no one is safe from mistakes, After all, the process of any training without fail includes the wrong decisions and the assimilation of the experience gained, including on them. But at the same time, of course, one should avoid the most blunders that are more likely to be destructive than constructive influence on a young trader.
1. Error choosing a broker. Fraudsters trying to earn a lot of newcomers and partnership with them will do more harm than good.
2. Paradoxically, a common mistake is the fear of one’s own mistakes. According to statistics, most novice traders lose their first deposit. This is not terrible, because the work of a trader is the sum of analytical abilities and self-control, and the latter develops with experience.
3. Too big first deposit. From the previous paragraph it is clear that the risk of merging the first deposit is very high. Stories in which a trader goes to auction and makes a fortune in a month exist only in the movies. Therefore, the first deposit should be no more than the amount you are not sorry to lose.
4. Trying to make Forex trading the main source of income. This is another movie scene and nothing more. For the first time, it’s enough to trade to get a small profit, the main thing is that you like it and gain experience. Serious income will come late.
5. The chaotic search for "magic" recipes for instant money. They simply do not exist. There is knowledge, experience and business acumen that come with time and without any miracles.