So, let’s say you have already spent a considerable amount of time learning the basics of trading stocks and company shares.
You have a solid portfolio that’s diversified and capable of producing long-term gains and you are past the point of needing to check on those assets every single day.
If you’re in this position, it might be time to add something new to your portfolio, and one way to do that is with Forex trading.
Never heard of it? The layman’s description is that “Forex trading is the process of speculating on currency prices to potentially make a profit,” according to ForexTime.com.
Currencies are traded in pairs, allowing a trader to exchange one currency for another. That means they are speculating on how and when one currency will rise or fall in value in comparison to another.
Foreign currencies are always in demand, which is what draws so many people to Forex trading. In fact, the foreign exchange market is the largest and most liquid financial market in the world, which can make it lucrative for traders, said Matt Choi, the founder of Certus Trading, which offers a Profit Blueprint Course for Forex Trading.
But as with any lucrative trading opportunity, there’s also risk, Choi said. You will need to do your homework to trade Forex successfully.
Find The Best Platform
There’s a seemingly endless number of platforms and softwares for trading online, including for Forex. They are not all created equal. You will want to research these platforms before committing to a specific one. If that sounds onerous, don’t worry. Start with Saxo Capital Markets, an award-winning Forex trading platform that has been around for more than 25 years. Serving about 800,000 customers since its launch, Saxo allows you to trade major Forex pairs from 0.4 pips.
Study the Markets
The concept of self-education comes up a lot when talking about successful investing, and that’s even more true with Forex. You have to take the time to understand currency pairs and the major market forces that affect their value. We’re talking about global economics now, not just the U.S. marketplace. That means exponentially more factors to worry about. Don’t take that lightly.
Find A Good Broker
This is similar to the platform tip. There are thousands of Forex brokers available to you, and some are far better than others. When you’re just getting started with forex, hiring a broker to help you analyze and understand the markets — that’s just being smart.
But you’ll want someone who actually knows what they’re doing and has established a reputation for returning value to clients. Please do not hire a non-regulated broker. That’s a bad idea. Find a registered broker. You’re trusting this person with your money — make sure they’re legit and also in your own country. Just because you’re trading with foreign currency doesn’t mean you should feel safe with a contract with a foreign institution.
Create A Plan
You probably know this one already from past trading experiences. Having a plan and sticking with it is always a vital part of successful trading, including for forex.
Your plan should have your goals for profit, for both 1-year and 5-year increments. It should address your risk-tolerance level (which a broker can help you figure out) as well as your trading methodology and evaluation criteria for specific currencies.
Finish your plan, have it double-checked by your broker, and then make sure each trade you consider meets the criteria of your plan.
Lastly, remember that it’s okay to make mistakes — just make sure they’re small mistakes that you can learn and grow from. Forex trading isn’t something you master overnight. Don’t sweat the small stuff, and keep working on it. Eventually, you’ll figure it out, and you’ll be glad you did.