Forex trading is the latest catch. However, it is worth noting that this is not a get rich quick scheme. Forex trading is a financial investment that requires one to make well-calculated moves and decisions in order to be on the winning side. Making profits is so easy, but so is losing everything.
Practice Trading With a Demo Account
To avoid making irreversible losses, traders wishing to invest in the foreign exchange market are advised to enhance their trade skills by practising how to place trades on a forex trading demo account. A demo account is a practice account that has nearly all the features of a real account. The main difference is that in demo accounts, you will only be trading with virtual or ‘fake’ money. Nearly all forex brokers have a provision for demo accounts; to gain skills it is advisable to do practice on at least three different platforms.
After gaining confidence in his/her trading skills, a trader then proceeds to register a real account. You can tell whether you are ready for real trade by answering a few questions while on the demo account. For instance, are you able to open and or close a trade, are you consistently placing trades and making profits, are you conversant with the forex terms used on the trading platform etc. If the answer to these questions is yes, then it is time to make real money.
Opening a Forex Trading Account
After gaining enough skills on the demo, you are now good to narrow down to the trading platform of your choice. If you have already identified one, you will need to select the account type of your choice, register, activate, deposit funds and start trading!
Choosing the Account Type
There are three main types of forex trading accounts. You can choose to either trade on the standard account, managed account or mini account. Several factors can influence your decision. For instance, how much money do you intend to invest as the starting capital? Mini accounts in most cases require the lowest starting minimum. If you want someone else to run the account trades on your behalf, then the managed account would be an ideal choice. If you simply do not want to invest a huge amount of money, then a mini account should be a good starting point. Most forex trading platforms do outline the requirements and the privileges of owning each account type. Choose what works for you.
As already mentioned earlier, you can make very profitable trades or lose your entire investment. It all starts here, be very careful before settling on an account type. In fact, until you are 100% sure of what it entails, do not deposit any funds into any forex trading account.
Registering a Forex Trading Account
Registration requires you to fill out an account opening form. Different brokers require different particulars and therefore, the forms do vary. Before filling out the forms, make sure you understand all the associated costs including bank charges or wire transfers costs.
Activating the Forex Trading Account
Upon the receipt of your account opening forms, the forex broker will then email you back with the details of how to complete your registration in order to activate your account. Follow the guidelines. Thereafter, the broker will send an email that has your username and account login password. You will also receive guidelines on how to deposit money into your account.
After depositing funds, you are ready to start trading. But do not forget to employ all the tricks and strategies learnt from your forex trading demo account. Here’s a reminder, until you are comfortable and successful in practice trading, do not make a real investment.
Tips on How To Avoid Losing Money While Trading Forex
The 24-hour market can make you rich, or swallow what you have. Below are tips on how to avoid losing your money
- There is no rush, take your time to find a reliable broker. Make sure that the broker of choice abides by the rules and regulations of the forex trading regulatory body in your country.
- Make use of demo accounts. Practice new skills and tricks on demo accounts before bringing them to real accounts. It is very easy to damage an account with a single click of the wrong button.
- Do extensive research. Know what factors influence market trends, economic trends and other factors that influence a country’s currency. Be in the know.
- There is no harm in starting small, in any case, you can always add more funds later.
If approached carefully, forex trading can be a rewarding investment.