Each day, more than £2.6 trillion is traded on the forex market, making it the largest financial market in the world. Its flexibility, scope and accessibility make it popular with traders of all types, from seasoned professionals to absolute novices. However, the very things that make it so easy to trade forex – its round-the-clock sessions, high leverage and low trading costs – also make it a very easy way to lose significant sums of money.
To make sure that you don’t number amongst its many victims, here are three top tips to help you out…
Tip One: Do Your Research
This may sound rather obvious, but you’d be surprised by how many traders enter the world of forex without knowing anything at all about it. If forex is three parts luck, then it’s also seven parts skill, and it’s vital that you spend some time building up the expertise necessary to become a successful trader. Some of this can be picked up as you go along, and indeed experience itself is a valuable teacher. However, that doesn’t mean it’s not worthwhile to familiarise yourself with the terminology, methodologies and information that lie behind turning a profit and navigating your way around the marketplace. Performing this research will be a valuable learning curve in itself, as a trader’s homework is never done: changing market conditions, regulations and world events mean that even when you’re on top of your game, you still need to put in the time and the reading hours to stay there.
Tip Two: Choose the Right Broker
There are so many forex brokers to choose from, so don’t settle for less than the best in terms of the service you receive. There are many less than reputable names that would be happy to take your money and spend it unwisely, but there are also a lot of good eggs to choose from. If you want to keep your investment safe, then it’s important that your broker knows how to make the most of it, rather than simply wanting to spend it. Every country, including the UK, has a regulatory body that all legitimate brokers should be registered with, so make sure you choose a name that’s on their list.
Of course, legitimacy and reputability alone are not always enough. You also need to find someone whose offerings suit you, so take the time to work out what you need in order to maximise the opportunities available to you. Really assess your trading style, the tools you like, your approach to risk, and other important factors, and then ensure that the broker you choose offers leverage amounts, commissions, spreads, initial deposits and so on to suit these.
Tip Three: Take Advantage of Demo Accounts
You’ll find that most trades now offer practice or demo accounts, and if the one that you’re interested in offers this service, then be sure to make the most of it. These accounts allow you to test out your broker’s offerings and play around with different methodologies and trading styles before you have to commit to anything. They often provide an invaluable learning experience, and should help you to make sure that the platform on offer meets all of your needs before there is any real money at risk.
Do your research and make the right choices from the outset and you’ll be well on your way to forex success.