Currency trading or alternatively known as foreign exchange is on the rise as it promises huge return for anyone willing to participate. However, there are few things you should know before diving right in, my friend! First and foremost, currency trading is risky! If you see some disclaimer saying "losses can exceed deposit" or sort, by all means, they are dead serious about it!
What You Need to Know Before Engaging Currency Trading
Due to that risky nature, you have to be very careful and consider only to trade with your risk capital. Do not, I repeat, NEVER do Forex trading a.k.a currency trading with money that you can't afford to lose. With that said, it's wise to engage currency trading when you have accumulated enough "extra" saving to spare.
Second, use leverage with care! We've learned that leverage is the main reason why retail trader can enter foreign exchange market with limited capital. However, over-leverage will lead you to over trading, and in turns periodically draining your account's margin.
That's why, use leverage only to minimize your risk. For instance, with leverage you can actually make trading lot turns smaller by only a fraction of it (e.g. 0.1 lot). Subsequently, you will earn less from closed floating position (pip), but what matter the most, it also reduces the risk significantly. We'll cover this detail onward, keep on reading.
Third, select a good and fair Forex broker to trade with. In other words, you are partly responsible for your trading decisions, the other part is on broker's end. In essence, the Forex broker controls all the trading terms and conditions, whether it's visible or hidden from you. Particularly when it comes to trading cost like spreads, commissions, etc.
Next, we'll learn how to open up demo account to simulate how currency trading works!
How to Practice Currency Trading in Foreign Exchange Market
This is the part where y'all want it, right? But wait, it's very advisable to learn the basics on demo accounts before you commit real money to live accounts. Picking up demo account for Forex Trading is easy, click picture below!
Done installing demo accounts? Then, it's about time we dig deeper into currency trading mechanics!
In a nutshell, currency trading a.k.a Forex trading is actually very simple. Practically, you only have to press either buy or sell button to open a position, and then wait for it to accumulate PIPs (Point in Percentage). After accumulating enough points, close the position to liquidate the profit to your deposit.
On second mark, let me repeat it.
Step one, press either buy or sell button to open a position. Fear nothing, just follow your gut instinct.
buy or sell button simple button showing both selling and buying options
Step two, hold that position for as long as you want it. To do so, keep your fingers away and let it run on its own.
Step three, close the position when you think you're done with it. In order to close a position, press an "x" button right next to "profit" column in your trading terminal.
an open position that lasted for approximately 2 days.
Yeah, it's just a demo account with virtual money! Do whatever you want with it! Fool around and see for yourself how much profit you can gain by doing random stuff!
What to Expect from Your Early Trades
Done goofing around with your demo accounts? How much profits have you made? Some of you might get lucky and netted hundreds of points. On another side of the coin, the other might lose the same amount of point. How can that happen? Is currency trading completely based on luck?
To be honest, as a beginner, streak of luck is all you need to make profit in currency trading. As a matter of facts, about 80%-90% of beginner fail their first account. But wait! There's a big "BUT" here! A professional in currency trading needs no luck to keep making considerable profit, trades after trades. That's because they have discipline and methods to reduce risks and maximize profits.
Yes, it sounds confusing. That's why at this point, all you can expect from your demo account is seemingly random wins and losses. However, along with times spent, you'll discover more currency trading tips and hints. Remember, perseverance is key to success here! Keep trading on demo account until you have figure out how to make consistent profit in currency trading!
Are You Built For This Game?
Fairly speaking, it's quite a far journey for a beginner to be an actual currency trading pro. Perhaps only 1% of you will keep trying after tons of failure and eventually reaps the benefit of such perseverance. Do note that currency trading is the largest, most active and liquid market anyone can participate, particularly in age of open Internet access. In other words, everyone (directly or indirectly) on this planet needs it to run 24/7 to keep global market functional.
Think again, the promises of huge of return isn't a lie. Truth is, it caters only to few participants. Who are they? Let me give you a tip; it's the broker, the huge investment banks, and few retail traders who know what to do at the right time. Are you ready to be one of them?