Historically, it was estimated that some 90% of retail forex traders lost money, and while this number may have declined noticeably in line with recent studies, it’s still thought that up to 70% of investors regularly incur losses.
With this in mind, novice traders will need to approach currency trading with tremendous caution, or risk losing disproportionate amounts of capital within a relatively short period of time.
In this post, we’ll look at how you can start forex trading, while simultaneously working towards a successful future.
Find a Suitable Broker
Once you’ve gathered all the information required to make informed trades, you’ll need to identify a viable and licensed broker through which to execute orders.
Reputable forex brokers in the UK are licensed and regulated by the Financial Conduct Authority (FCA), while they often offer access to a broad range of markets including stocks, commodities and indices in addition to forex. Such entities should also commit to keeping your money segregating from its own capital,
You should also look for a broker that’s capable of meeting your numerous requirements, particularly in terms of the technical analytical tools available and their compatible trading platforms that can be utilised alongside (we’ll have a little more in this below).
Established brokers such as Tickmill are an excellent place to start, as they also feature lucrative welcome bonuses for traders who register for new accounts.
Utilise a Demo Account
Once you’ve identified a viable broker, the next step is to utilise this to gain practical and live experience of the forex market.
However, traders are often loath to step straight into the market, thanks to the inherent risk posed by volatility and the potential to post a leverage-induced loss.
To resolve this issue, you should start by using a so-called “demo account”. This essentially provides you access to a simulated, real-time marketplace, and one where you can hone trading strategies and experiment with different amounts of leverage without risking your hard-earned capital.
Typically, you can use a demo account for a period of between three and six months, and we’d recommend that you use as much of this time as possible to prepare for the realities of trading.
Identity a Forex Trading Platform
Finally, you’ll need to access a forex trading platform that’s compatible with your broker, whether this is a proprietary option or a third-party app like the MetaTrader 4 or MetaTrader 5 (the former of which is the preferred choice for forex traders).
It’s through this platform that you’ll execute individual orders, while also utilising tools such as stop-losses to minimise risk and automatically close positions once they’ve incurred a predetermined level of loss.
From here, you can also begin to trade securely with real money, ideally starting small and with just one or two major pairs before scaling your efforts in line with earnings.
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