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  • How to Get into Forex

    In today’s uncertain times, it can be helpful to have extra income streams to contribute to your financial security. One of the most accessible ways is through the foreign exchange market.

    To date, it is the largest financial market globally by trading volume. In 2020, the market was valued at $2.4 quadrillion – that’s 15 zeroes!

    The forex market is so popular because it is relatively easy to get into. Anyone can become a forex trader with the right broker, the right strategy, and the right attitude.

    There are a few key fundamentals that need to be learned to get into the market and thrive in forex trading. This article will discuss them.

     

    Forex Trading 101

    Forex, also known as FX or foreign currency exchange, is simply the process of trading one currency for another. It is usually done for various reasons, including tourism or commerce. In this case, forex trading aims to earn profits. This is done by buying currency when the value is low and selling it when the value increases. The difference in costs is the profit you’ve made.

    The forex market is where these currency trades take place. Traders, through brokers, access the market and look for potentially profitable trades.

     

    Definition of Terms

    Here are a few key terms you will likely encounter in forex trading:

    • Currency Pairs – These are pairs of currencies typically traded. The first currency is called the base currency, quoted in the second currency, called counter currency. Currency pairs can belong to one of the following groups:
      • Major pairs – These are traded often. Examples include USD/EUR and USD/JPY.
      • Minor pairs – These are traded less often. Examples include CAD/USD and GBP/AUD.
      • Exotic pairs– These are rarely traded. Examples include USD/THB and EUR/HUF.
    • Exchange Rate – Refers to the amount of counter currency needed to trade for one unit of the base currency in a currency pair.
    • Pip – Pip is short for ‘point in percentage.’ It represents the smallest changes in the exchange rates of currency pairs. Most currency pairs have a size of only 0.0001. 

     

    Choosing a Broker

    One of the first things you need to get started in forex trading is to find a reliable broker. I stress the importance of reliability here because you will essentially be relying on the broker to store your capital, execute your trades, and secure your profits.

    The ideal forex broker will offer the following:

    • Secure Platform – Most brokers will have their proprietary platform for forex trading. Look for one that is regulated and secure. Multiple deposit and withdrawal methods are also a good sign that your money will be safe.
    • Demo Account – One of the best ways to learn trading is to practice using a demo account. You can execute trades and try out trading strategies in a demo environment without risking real money. Not only will you find out whether your plans are sound, but you will also gain the confidence you need when you finally start trading.
    • Tools and Resources – Some brokers will also give you access to tools like fundamental analysis graphs to help you develop a deeper understanding of the market. Resources such as articles and news pieces will also help you learn more about trading, risk management, and even strategies that other seasoned traders have employed. 
    • Support – One easily neglected feature of forex brokers is customer support. Find one that offers help 24 hours a day. Since you will be trading currencies from different parts of the world, it’s essential to know that you have someone to reach out to when you need help.

     

    Keep Learning

    Whether you’re starting out or already a seasoned forex trader, it’s essential to keep learning. Finding new strategies, staying updated with current events, and recognizing patterns with fundamental analysis are all critical in a thriving forex trading career. These all require you always to have a learning outlook.

    Consult resource websites like The Forex Library to stay updated with the latest forex news that can impact the foreign exchange market. You can also use the tools and resources at the Fair Forex website when you want to see test the viability of your trading strategies.

    If you have more questions about starting your forex trading career or becoming an entrepreneur, you can send me a query at [email protected]. I’m committed to sharing tips with my readers about ensuring your financial security. I’ll be waiting for your email.