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A Simple Guide on How to Start Trading Foreign Exchange

A Simple Guide on How to Start Trading Foreign Exchange

As a beginner, you are most likely confused. You are thinking of how to approach the Forex market but ideas do not seem to come. You might even be considering the use of the so-called top trading signals. But that will be like putting the cart before the horse. However, it is not your fault. No one is ever up to what he does not know.

It is because of individuals like you that we have prepared this guide. When you are done with it, you will not only be able to effectively approach the Forex market, but will also be able to deploy tools that can really enhance your success.

What is Forex?

Foreign Exchange, Forex for short, is the act of buying and selling currency pairs. It is a process you have most likely experienced at the airport before. For example, if you are going to France from Canada, you will have to exchange your Canadian Dollars (CAD) for Euros (EUR) that you will be spending in France.

However, apart from that, currencies can also be traded for speculative purposes. This is the Forex we will be talking about here. For example, if you just think that the CAD will increase in value in relation to the EUR, you can decide to buy more of it. Since currencies are traded in pairs, you will be having to simultaneously sell the euros, however.

The most popular currency pairs traded by Forex speculators, also known as the major currency pairs, are the EUR/USD, GBP/USD, USD/CAD, USD/CHF, NZD/USD, USD/JPY, and the AUD/USD. In order to limit your trading costs, we encourage you to stick to just them.

Forex Traders

Traders in the Forex Market can be broadly categorized into two: institutional traders and retail traders. Institutional Forex traders are the corporations, pension, mutual, and hedge funds that participate in the market with large capital. Because they are the largest, they exert the greatest influence on the market.

In fact, the impact of institutional traders on the market is so much that they are called “the Smart money.” Apart from the sheer huge size of capital they have at their disposal, institutional investors also have the expertise to comprehensively understand the market.

On the other hand, retail traders are individuals that participate in the Forex market with small capital. Because of that, they exert only minimal impact on the market, without the ability to move it as their institutional counterparts can do. An example of a retail trader is you, yourself. 

Forex Broker

Dear trader, you cannot have direct access to the market. You will need a Forex broker for that. A broker will serve as the middleman that will connect you to the market. When you buy, your broker will route your buy order to the market and link you up with another trader who wants to sell.

Similarly, when you want to sell. The same broker will find a buyer in the market for you and ensure that your order is promptly executed at the price stipulated by you or at the best available one. In addition to this, your broker can also provide educational materials and other useful resources for you.

The Trading Platform

This is very important. All the services that your broker will provide, will be provided via its trading platform. So, it is important you get a good one. Once you have ascertained that the broker you have chosen is registered, the next thing to do is to check out its trading platform.

The platform has to be easy to use. It has to be adequately housed with the required materials, with an extremely friendly user interface. Also, it must be designed in such a way that you can deposit and withdraw your funds easily and trade without any glitch or hitch.

Taking Your First Trade

Now, you can take your first trade. However, be careful. Forex trading is not an easy game. You have to know what you are doing. Having been taken through the basics of the trade in this guide, before you take your first trade, you might want to subscribe to the Forex Trading Signals now. Even at that, you should learn more. With this guide, you are already on track.

Nevertheless, Forex trading requires of you a steep learning curve. So, you have to be diligent in learning. And while you are at it, be patient, too. It will definitely take some time for the results to show.

Conclusion

There you have the process of trading foreign exchange. Evidently, it is not as hard as you have thought, or is it? Even if you find it so, just give it time. Rome was not built in a day, was it?  At Technical Trading Signals, we believe in supporting our customers with quality signals. Having already learnt the basics of Forex trading, you will be able to effectively use our signals now, while also growing into an independent trader in your own right. Hence, you should subscribe to our signals here.