How to trade on Forex
Forex is shortened for Foreign Exchange. Basically it means an exchange of currency. The Forex market is considered the international currency market – the largest and most active financial market in the world. Its daily turnover exceeds $5 trillion. Many people perceive Forex trading as their main job and make a lot of money on it. You can do the same, and we will tell you how to do it.
Learn the theory
One of the basic wisdom of the trader is that you should make money when there is a profitable opportunity to earn, and not when you want to earn. To differentiate between the two and learn how to approach trading with a sober head, you need to thoroughly study the theory. For example, you need to know what is standard account in Forex is, what are the effective trading strategies, etc. – you can read all these articles on fbs.com.
Make an agreement
If you do not have a qualified investor status, you will first have to take a free test. The test allows both the dealer and you to make sure that you understand the features and risks of Forex trading. Then you sign a contract with a Forex dealer and install the dealer’s trading program on your device.
Make a deposit
To make Forex transactions, you must transfer a deposit to the dealer’s account. This money is a guarantee that you can fulfil your obligations on Forex transactions. A Forex dealer can use currency quotes from international currency exchanges, banks, brokers, news agencies, and other reliable sources.
Start earning after closing a deal
The online program takes into account all your trading transactions – conditional “purchases” and foreign exchange “sales”. But the real money comes to your account or is debited from it only after you close your trades. If you correctly predicted the movement of the exchange rate, the dealer credits your account – your deposit increases.
You cannot withdraw the deposit from the dealer account until all transactions have been completed. And you can top up your account anytime. It is important to remember that if you make a bad deal, you may lose the total amount of the deposit.
What you need to know about closing deals
Before you make a trade, you choose two different currencies – a currency pair. One is basic, the second is referred to. Your task is to try to predict how the exchange rate of the quoted currency will change relative to the base currency. Typically, the dollar is chosen as the base currency, and you can choose any other listed currency.
However, you have to keep in mind that the Forex dealer takes a commission for his services. All rates must be specified in the contract.
Remember that you cannot avoid mistakes and bad deals, so we do not recommend making large deposits right away if you do not have experience and self-confidence.