Once you have learned the basic stuffs pertaining to Forex Trading and you are all set to go, you have to ensure that you are ready to dedicate the time and effort it takes to be a Forex trader. Here are the two final steps you do before you enter into the live market.
- Find out a broker
As you already know when you are investing money, you need to realize how important it is to find out a good broker who can help you use the money efficiently. Make sure you do a research about the brokers and the standards they are required to meet before you search for the one who suits you and your needs.
A Forex broker is required to protect the integrity of the market and should encourage an open market without any scams. A trader who finds a problem with a broker can file a complaint against the broker to the respective authorities and look for a solution to a problem.
Check for the year in which the broker was established to understand his reputation and durability. A fraudulent broker is unlikely to stay for long in business. Thus those who have been around for a couple of years must have gained some credibility. Thorough research can be done over the internet to identify the broker you want to deal with.
Brokers provide trading platform. A trading platform is where a trader can enter and check his trades. It’s a means of interaction with the market. Traders should check that the trading platform is easy to understand and is user friendly. Trading platforms should also be verified for order entry options, trading strategies, alerts etc.
A broker should also be accessible to the traders throughout. Since the trading happens 24 hours a day, broker should be able to provide customer service during the trading hours in case the trader would need help.
The brokers make money through commissions and spreads – the difference between the bid prices and ask price for a currency pair. Some brokers tend to make more money by quoting wider spreads. All commission and fee details should be clearly stated by the broker and traders should clear all their queries before agreeing upon a broker.
Thorough research can help you identify your broker so that when you trade you can easily spend time on analysis and your trading strategy. The time you spend on this research pays off well.
- Trade on a demo account
Forex brokers offer demo trading account which is really useful for new traders. You can practice as much as you want using the demo money you get. Practice for few weeks and you will see that you gradually gain the confidence you need to open a live trading account. Through the demo account you will also get a chance to understand the trading software provided by your broker. Familiarize yourself with the tools and applications available. Demo trading accounts provide you with all the features of the live trading account except that you are not trading with real money.
Once you are ready to go, open a live trading account and get started. Oops wait for a second. You would want to consider these factors before opening up a live account though.
While opening an account you need to determine the leverage you would want to use. Think and choose the leverage as there is always risk involved with the leverage ratio you choose. o Trading Platform
Are you confident about the platform you are going to use or you still are in doubt. This is something which you should ask yourself before agreeing upon the broker.
- Commissions and Spreads
Even though most of the Forex Brokers don’t charge any commissions when you open the trading account, you need to look for the currency spreads. You should find out the spreads for the currency pairs you wish to trade upon.
Forex market is less regulated unlike other equity markets. Hence make sure you go with a broker who is good enough and is well reputed.
Do your thorough analysis and learning before you open up a live account. This will ensure that you are confident enough to place the trades and you would be prepared to handle unfavorable conditions arising unexpectedly. Also, it is a general practice to keep changing the trading strategies when it comes to real money, bear in mind that this might result in a huge setback. If you feel you are not confident enough, keep practicing with your demo account until you feel so.