Why to trade Forex?
This is the most liquid market in the world. There are always buyers and sellers for all the major currencies. Over 85% of transactions involve the major currencies: US dollars, EUR, British Pound, Swiss Franc, Japanese Yen, Canadian Dollar and the Australian Dollar.
Forex trading is not centralized – it is a global network of banks, brokers and private traders.
Unlike commodities or stocks you will never end up with a major currency on hand not knowing what to do with it. Also you can specify the exact amount of money you are willing to risk with your stop loses and taken into consideration the liquidity of the Forex it is highly unlikely that your stop will not be triggered. This might only happen if you trade major news – which should ideally be avoided unless you have a specific set up for trading news.
Trading currencies is clearly not for everyone. It requires self-discipline and adherence to your trading plan no matter what. First of all you need to read good books on currency trading then develop or buy a trading plan. After that you need to open a demo account with a broker who preferably has the MT4 platform so you will be able to automate your trading if at some point you decide to do so. It is also easy to install different indicators on the MT4 platform.
Another important feature of the Forex market is that it is open for trading 24 hours a day from 6 PM EST on Sunday until 4 PM EST on Friday.
You can trade currencies online using margin. This means you can trade 10,000 or even 100,000 dollars contracts with a deposit of as little as 250 – 2000 dollars depending on the broker’s requirements. Unlike commodities market you cannot lose more money than what your initial deposit was.
In the Forex market it is easy to earn lots of money within a short period of time however, the opposite is equally true. Make sure you risk only money that you afford to lose – never risk money that you allocated to some other important expenses such as mortgage payment, rent, car payment, food, medical expenses, etc. However with a little deposit required it is not hard to save up some “risk” money. As I already mentioned never start trading without using a demo account first even if you can afford to lose that money.
Losing money is not your goal, right?
Sound trading strategy that brings consistent winning trades in demo account along with sound money management techniques are of paramount importance if you want to be in this business for a long time.
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