Learning to trade on the forex market is a challenging task and can be quite overwhelming for a beginner as there are considerable risks associated with trading for the uninitiated. The saying “look before you leap” should be headed; fortunately, there is ample advice and education out there to help new traders get started easily and safely.
Scams and malicious behaviour are prevalent
While the risks are many and significant, a basic grounding with a trading education and mentorship can help shorten the learning curve. Some of the risks associated pertain to the international nature of forex trading; every country has its own set of laws and regulations, while exchange rates and interest rates also bring risks. Other risks relate to the how the speed at which prices can move, especially during volatile periods, which can catch out the inexperienced.
Fortunately, forex trading platforms offering risk management tools can steer you clear of the pitfalls and make the process simple to understand. What’s more, trading online affords dynamic, 24/5 access to $5 trillion worth of daily trading volume, as stated by online broker Easymarkets.
Basically, when you trade forex, you sell one currency for another. Because forex is a leveraged financial instrument, it can be risky and you should always practice healthy risk management when trading leveraged products, including calculating and adhering to your risk to reward ratio, strategy, and investment goals.
Start trading forex
Forex trading typically involves a CFD (Contract for Difference) which allows you to trade the price of your chosen currency for another, without the obligation of owning it. This means you can trade and potentially benefit from both upward and downward movements. As with any investment product, there are risks involved owing to the numerous variables that affect market volatility.
Everyone learns at a different pace, but the general rule of thumb is to trade with a demo account for between three and six months, or until you can produce replicable results and conservative returns consistently; a serious trader should always be researching and learning.
Forex is one of the most straight-forward types of trading, but it is still complex and requires specialized knowledge. The above-mentioned Easymarkets offers an extensive educational library and a trading education module with multiple video lessons and knowledge tests. These are available for free; all you must do is sign up.
Any number of free YouTube videos will purport to get you started, but it’s important to do some research to determine whether the advice comes from a knowledgeable, experienced, and trustworthy source, gearing you towards a professional start in trading.
YouTube trainers all have very different styles and methods, so you might like to sample several of them before settling on any one channel to learn from. A good rule of thumb is to look at the number of followers the channel has, the number of likes for each individual video, and survey the comments, looking for positive feedback and affirmation that the advice and training given is solid and helpful. Any number of followers above 200K is a good bet that the advice is likely to be sound.
Also, ascertain whether the personality or organisation providing the education has any published articles or blog posts to his/her/its credit on reputable websites, as well as ancillary material on the market such as podcasts, eBooks, and books published by reputable publishers; all of these are a good indication that you’re in safe hands. Remember that free might not always be best; buying books and paying for subscriptions to quality material is money well spent and a good investment in yourself and your new endeavour.
Lastly, it might seem obvious but begin a habit of studying the business news pages of trusted brands such as the Wall Street Journal, Bloomberg—Bloomberg TV provides superlative business news updates—The New York Times, Financial Times, or even any local news publisher of your choice which has a good reputation for covering global company, business, and economics news.