Forex trading is a challenge for beginners. It’s complicated, and newcomers tend to have unrealistic expectations. So, if you’re considering taking it up, you should remember that currency trading is no quick money scheme.
Today, we offer a brief introduction for beginners on the Forex market. Consider this guide a starting point and go on exploring, so you enter the market well-informed.
What is Forex?
Forex is a financial market, and one of the largest in the world. Immense amounts of money get traded on it every day.
As such, Forex is also the most liquid market in the world, making it easy for traders to enter and exit trades at low costs. It creates many opportunities for profiting on positive and negative moments for currencies.
When Can I Trade?
Forex never sleeps, meaning you can trade whenever you see fit. This financial market has no physical trading room, but trades take place between the parties, making it non-restricted to any business hours.
However, it’s a global market, so there will always be parts of the world awake and doing business at different times during the day. At these times, their currencies will see the most movement.
So, as a trader, you get to do business whenever it suits you best, five days a week.
If you enter the market with a firm grasp of the most frequent expressions, you’ll see a much more seamless integration. Find a Forex dictionary and start getting familiar with it. Here, let’s take a look at some of the most common words and phrases.
- Base currency – the currency you own.
- Quote currency – the currency you want to buy.
- Ask price – the price your broker asks in exchange for buying your quote currency.
- Bid price – the price your broker asks in exchange for buying your base currency.
- Spread – broker’s commission, or the difference between the bid and ask prices.
- Pip – an abbreviation for ‘percentage in point‘, or the smallest value of currency movement. It’s equal to 1% of your currency.
Once you learn the language of the market, the research you do will also become more manageable.
Choosing a Broker
Before you start trading, you’ll select a cryptocurrency broker. The company you pick will help you trade and offer extra financial services.
Here, a reputable broker means the difference between profiting and losing. Your choice will depend on your needs and preferences, but here are some of the best brokers out there:
- Forex.com – low-cost, massive Forex broker
- OptionsXpress – best for beginners, excellent customer service
- Duxa Capital – various account types, lot of flexibility
- E-trade – best for trading veterans
However, don’t take anyone’s word without a grain of salt. Research by yourself and make a wise decision.
The Bottom Line
Finally, as a novice, you’ll work on developing the mindset of a business owner. Every transaction will ask for a plan, monitoring, and auditing. That’s the only way to avoid crashing and burning.