Forex is a foreign exchange that has created new aspects of financial independence for many people. Forex is a global decentralised platform for the trade of currencies. In this buying, selling and exchange all aspects of currency trading at current or fixed prices take place. There are five ways to become Forex trader, let’s see about that in this article.
Forex trading has revolutionised over the decade, making itself accessible to every common man. You can venture into this world with an internet enabled device and a small deposit as a margin.
Forex trading is not complex like day trading or traditional trading. So No large amount of investment is required in the form of equity. Anyone can learn the basics if they are familiar with computer operations. While the prospect of losing money persists in every trading, it is comparatively lower in Forex trading. However, if someone wants to turn their efforts and time into profit.
How To Become as a Forex Trader?
Automatically the first question you get as an inexperienced trader is how to get started with forex?
1. Get an Internet Enabled Device
The main reason why Forex trading gained this tremendous popularity in the last decade is easy accessibility. Obviously, if you have a device that could be connected with the internet, you are all set to start viz an online broker.
You can select any device to trade, you can do it through your phone, tablet, laptop, or desktop. While most of the trading applications are readily available on Android and windows, some can be found on Mac and iOS as well.
2. Find a Reliable Online Forex Broker
You will find plenty of good Forex brokers. Most of the Forex online brokers have the same commission and margin system, it is always advisable to compare before you finalize. Simply online trading is safe if you use a regulated online forex broker.
To trade Forex, you need a reputable online broker. Trading with a trustable Forex broker is a crucial factor for success in international currency markets.
While the role of Forex brokers is to provide access to trade Forex markets or other instruments mostly to the retail traders, allowing them to start with small investments and allowing access to trading almost to every individual interested in Forex trading.
3. Create an Account
Next thing that you need to do is to open an account, this is not a complicated task and you should be able to do it independently. Once you have decided on your broker, you can simply visit the website and open an account.
You will be asked to confirm that you have a legal identity and will not be getting involved in money laundering. You need a Forex trading account to become as a forex trader.
4. Deposit Funds
Like other trading platforms, you need to deposit some money into your account as well for safety reasons. Brokers will use these funds as a margin and for creating leverage. The leverage ratio depends on you and your broker’s location.
Your broker will most likely offer several funding methods to you. You can also select the one that is most convenient for you. In the future, if you want to withdraw your money, you can use the same methods. So always select the method that you are comfortable with.
5. Make Your First Trade
The next question you get as a Forex trader is, how to get in the Forex market? You need to give yourself some time to learn how to use the trading application. So familiarize yourself with it. Learn how to enter and exit the platform without leaving loose ends.
Make a demo account if you are not sure to avoid making costly mistakes. When you feel confident, you can get started and make your first trade in the Forex market.
Deciding Between Long And Short Positions
By entering into the Forex trading market, you enter into a position that is like a non-binding contract. The position can be long term or short term. You can add positions by the number of transactions. And you also have the option of reducing the position by closing your existing trades.
Your position is based on the exchange rate of the currencies, you need to understand them. Every currency pair is made with a base currency and a counter currency. Traditionally, these pairs are noted by three letter iOS 4217 codes with a slash in between.
If we are considering Britain’s pound as the base currency against the U.S dollar. Now you can understand how base currency and counter currency work.
In a long position your position will be long term if you buy the base currency and sell the counter currency. If your currency is GBP/USD and you are buying GBP and selling USD, you have taken a long GBP position.
In short position, it is exactly opposite of a long position. If you are selling the counter currency while selling the base currency, you will be in a short position.
Risk And Rewards
If anyone who enters a sort of trading market is looking to make profits. It is the same with trading forex. You can make positions if you make profits. At the same time you can make losses when your position loses value.
However, these gains and losses are only realised when you decide to close the position. As long as the positions remain open, everything is unrealised.
All the inevitable risks and rewards involved in Forex trading by taking a position are based on the concept of leverage. Here, leverage is noted in the base currency that you have chosen. It is expressed as a ratio of the position size that you can control against 1 unit on your deposit.
One doesn’t need to be an expert in stock and trading to become a part of the Forex market. The process of learning only differentiates a successful trader from a beginner. While someone can set up a Forex trading account, not everyone can develop the right strategy, discipline and the mindset to be a part of this world for a long time.
You should be fast and accurate, because there is a lot of unavoidable clerical work. These are all the qualities to become a successful trader. At the same time you should be transparent to yourself about your mistakes.
Start slow and work upwards. This market is for resilient traders. Any rash decision can put you in deep waters. Analyse your mistakes, so your learning curve will decide whether you are suitable for Forex trading.
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