We should not pretend that the beginnings are not always hard. Forex is no exception. Because I have lived this through, I’ll take the liberty to give you a few tips how to start Forex trading. These tips can help you during the first steps but then it’s going to be hard work, anyway.
Start trading with demo account
Teaching a kid to swim by throwing him or her in the water is not a bad method. It’s practical and can be applied to trading, too. According to this method, you should first find any Forex broker (for the time being, don’t think too much about the broker’s repute) offering a free demo account. Get registered, download and install a trading platform (usually MetaTrader 4 or MetaTrader 5), log on to the system and go!
Don’t hesitate to open a trade, wait for a few seconds (or minutes, hours…) and you will see what the trade has done, how prices have changed etc. You are on a demo account, so the money is fictitious. Getting familiar with the trading platform, you should try to enter take profit and stop loss. These are price caps, at which a trade will close automatically.
Plunge headlong into the game, which is why you have a demo account. This will give you more than seeking the best broker and an ideal trading strategy. These things are important but you will get to this later on. Well, let’s walk step by step.
Choosing a broker
The process is very much like the one with binary options trading. Broker is your trading partner. A partner putting a spoke in your wheel or stealing from you will hardly be a good partner. Fortunately, it is not a problem now to find a decent broker. I recommend that after typing the name of your broker, you also type words such as “experience”, “forum”, “discussion”, “scam” (“fraud”) etc. If you find your broker based on positive reviews from beyond this website, ideally from the traders community, there is no reason to be afraid.
We will spend more time on the “Choosing a broker” topic but the basics outlined above should at least help you not get bamboozled.
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Looking for initial trading strategy
I’d prefer taking a headlong dive as in the previous case. Now you need to test everything. Though Forex and discipline are two inseparable parts, too much theory will be for nothing and boring and might discourage you before you ever start. Initially, I recommend something simple (paradoxically, sometimes the simplest is the best) let’s say trading support and resistance, trend lines. These represent price levels, at which the market operates. In case of trend lines you will connect maximum/minimum prices as you can see in the picture below. Then you will speculate about the price and trend. Should the trend line get broken you can expect trend reversal.
Support and resistance related to a significant point (such yearly low of EUR/USD will be a strong support) behave similarly. Once the price gets close to this level it is likely that something will happen to the price. Usually at least a short-term trend reversal will occur (with minimum timeframe such as 5 minutes). This might be enough to help you.
Now you get a basic picture of the situation. Start it off, open your demo account and trade and test… Nevertheless, be cautious the demo account has one disadvantage. It does not involve emotions. Therefore, once you familiarise with the trading platform and the market (in about a week’s time) I recommend you continue with a live account, no matter how small your initial deposit is (depends on each individual)
Recap: How to start Forex trading
- Pick randomly a broker and open a demo account with this broker
- Test the demo account, do first trades and familiarise yourself with the trading platform (typically MetaTrader 4 or 5)
- Once you have completed the first two steps, start studying the broker/s and the trading strategies
- You can try out our recommended trading strategy
- Keep testing with your demo account for about a week, then migrate to a live account (minimum deposit will do)
- Don’t be afraid. A new part of our series about Forex trading is coming soon. You will learn much more!