Foreign exchange trading takes place 24 hours a day, seven days a week and 365 days a year. Indeed, at any given moment, someone, somewhere, is buying or selling foreign exchange. Because of the sheer size of the forex market, which in terms of liquidity is far and away the world’s largest trading market, it’s natural that access to the currency markets for retail traders is readily available through utilizing the services of an online forex broker. In actuality, there are so many such online firms available that any retail investor wishing to get involved in forex can easily become an independent online forex trader. Here’s how it works:
The worldwide currency markets simply facilitate the exchange of currencies from one to another, and although sovereign governments and major international banks are the prime players in this market, individuals can also participate as retail investors by utilizing the services of an online forex trader, also alternatively known as a dealer or broker; these online traders give the retail forex investor access to the currency markets and a platform from which to execute their trades by providing their clients with online forex trading accounts.
While more exotic currencies abound, the vast majority of forex trades are executed between a handful of major currencies, which are always traded in pairs. The most important of these currencies are the US dollar, the euro, the Canadian, Australian and New Zealand dollars, the British pound, the Japanese yen and the Swiss franc. These currencies are being traded somewhere in the world at all times, thus, your location is irrelevant when trading online, as is your time zone, because you can place your orders and execute your trades any time you like (unlike when trading in the stock markets, which can only be accomplished during market hours). Further, and also unlike when trading stocks, online forex brokers offer their clients a high degree of leverage, such that even with the smallest investment of own capital, a skilled online forex trader can begin to quickly realize significant forex trading profits: when taking advantage of generous leverage, gains are generated even when a currency pair changes in value in an amount as small as one pip (a “pip” is the smallest increment in currency trading). Further, most online forex trading firms do not impose commissions or brokerage fees but rather, make their profits off of the spread between the buy and ask prices paid by their retail clients, thus, there are few, if any, unexpected costs eating into your online forex trading profits. It’s obvious that there are a number of attractive reasons to get started trading forex online.
If you want to get started trading forex online, you’ll need to establish a relationship with one of these online forex brokers. Since they’re so plentiful, how will you know which one represents the best fit for you? First of all, look for a forex broker who offers you the chance to practice your trading skills by trading virtually in an online demo account. The experience you can gain by trading in such practice accounts is invaluable and indeed, you should trade virtually in this manner for as long as you possibly can before staking your activities with real money. If necessary, you can open more than one such account with more than one foreign exchange broker so that you can be certain that you have gained sufficient practice not only to sharpen your skills, but also, and equally importantly, to recognize the pitfalls of trading which you should avoid. Utilizing multiple accounts for this purpose is also a good way to get a feel for different brokers and the unique aspects of their platforms, with a view toward identifying which ones are the most suitable for you, or are the best fit, from both the technical (the interface, the user-friendliness of the software, the ease of account access and the like) as well as from the personal standpoint (the effectiveness of the firm’s customer service and problem resolution procedures). Recognize which firm seems to be best-suited for you as you test your trading skills on your way to beginning your real trading activities.
Look for a foreign exchange broker that offers you different types and levels of accounts, such as micro accounts (which require the smallest initial deposits), mini accounts (which require a sum somewhat higher than a micro account, but still, a sum that’s manageable and within reason), a standard account or even a Muslim account, and pay close attention to the amounts of leverage that are available at each level of account status. As stated above, taking advantage of the generous leverage offered by online forex traders can help you to increase your profit levels exponentially; however, you must acknowledge that the opposite is also true: if your trade goes south, you’ll be on the hook to your forex broker for the full leveraged amount. Indeed, gains and losses can come swiftly when trading forex, and as an online forex trader, you’ll need to be certain that you always stay on top of your positions in order to minimize your risk. Always being certain that you close your positions before you leave your screen for the day is one simple yet effective method of mitigating your forex trading risk, as is practicing sound money management techniques, such as never investing more than 5% of your account balance in any one trade. If, in addition to this, you make a point of withdrawing your initial investment from your forex account once you’ve made sufficient profit to cover your starting deposit amount, then you’ll only need to make withdrawals of profits at regular intervals, keeping just enough in your account to cover your positions at any one time, to have eliminated much of your risk through the implementation of simple and logical money management strategies.
Being a successful online forex trader also requires at least a minimal level of analytical skills so that you can identify the optimal points at which to fix your take profit and stop loss orders. If you’re not put off by the technical side of things, you can also maximize your chances of forex trading success by utilizing charting methodologies to spot trends and trade at optimal performance levels. It’s not nearly as hard as it may initially seem, and it’s worth every moment spent occupied with research and analysis in terms of the significant profit boost that proper due diligence can help to achieve. If you can stay focused and disciplined in addition, keeping your emotions in check, then you’ve got what it takes to trade forex online successfully. Make sure you’ve picked the right online forex broker, open your account, and start participating in the world’s largest trading community. Contact LucrorFX today for information on forex trading.