Since now you know what Forex is and familiar with some basic terminology, you need to know how to get started with some practice. Theory can’t teach you much unless it is accompanied by practice. So, the next thing you need to do is to find a broker, sign up for a demo account, download a trading platform and start practicing.
Choose A Forex Broker
- There are so many Forex Brokers, available all over the world. Some are legitimate brokers and some are scams. So, it is important to do enough research on the credibility of a broker before you decide to open an account. Make sure you look for the reviews about the broker and read about the customer complaints. Just a simple Google search can reveal a lot of information about the credibility of a broker.
- Forex brokers earn money with the spread. Whenever you place a trade, the broker charges a fee or a commission per trade or a spread as a transaction cost. So, make sure you compare the transaction costs of various brokers and choose the one that suits you.
- It is also very important to know whether trading with a broker is going to be hassle-free and make your trading easy. Check if they have a good customer support and can be easily contacted when you face problems. Make sure they offer a user-friendly and useful trading platform. Also, find out if they are going to make the deposit and withdrawal of the funds easy. You can find out all these information by reading the reviews about the broker.
Register For A Demo Account
A demo account is free with most of the Forex Brokers. With a demo account, you can practice trading with absolutely zero risk. You can learn technical analysis and test your skills with your demo account.
You should practice demo trading until you know all the fundamentals and get comfortable in trading. This is very important; that is why we have written it in bold letters. It is by continuous practice you will learn all the ins and outs of trading. Since you are not dealing with real money, you can place as many trades as you want and test out your strategies. It is all important to learn everything about your trading platforms. You can explore the world of indicators and learn to use them.
Learn The Trading Platform
Once you open a demo account, download the trading platform offered by the broker. Most of the brokers use MT4 or MT5, but they usually offer their own customized version of Metatrader. Take your time to learn the trading platform and explore all the features available. This is the tool you will be working with; so it is mandatory to have a strong hand on your trading platform.
There are many video tutorials available on YouTube that teach you basic things like how to open a trade, how to partially or fully close the trade, how to install an indicator, how to change the settings, etc.. Whenever you learn about an indicator or a strategy, a practice that in your trading platform with your demo account.
A Short Introduction To Market Analysis
Forex is not gambling. You don’t make blind predictions and depend entirely on luck. Instead, there are some ways to predict the market movement with various types of analysis.
Technical analysis is based on the fact that history tends to repeat itself. By looking at the price movements in the past, you can predict the price movements of the future.
Technical analysis is all about the charts. It is the source of all the information you need to do technical analysis. By looking at the patterns that were formed in the past, you can form trading ideas. Since traders around the world are looking at the charts and make similar predictions, technical analysis tends to be self-fulfilling as well.
There are various tools available by default on the trading platforms which give some ideas about the trend. These tools are known as indicators. You can also install some indicators developed by third parties.
It is also possible to make predictions without using any indicators. Instead of using indicators, you can just look at the price movement on the chart and analyze the market. This is popularly known as ‘Price action’.
Forex market reacts to changes in politics and economics. Anything that affects supply and demand affects the Forex market. Fundamental analysis is all about analyzing the news reports about political, economic and social changes and making predictions based on these reports.
When doing fundamental analysis, the news reports, economic data and political data are very important. With a single news release, you may see a sudden quick uptrend or downtrend in a pair. So, traders sometimes plan ahead according to the upcoming news release and make very careful decisions to take advantage of the situation.
News releases related to interest rate, retail sales, trade balance, industrial production, business sentiment surveys, manufacturing sector surveys, consumer confidence surveys, trade balance, etc. are some of the most important news releases to watch out for.
The sentimental analysis is a type of analysis which is based on the overall psychological state of the market. There are millions of participants in the market, which include retail traders, small and big institutions who have different opinions about whether a currency pair is going to be bullish or bearish. Based on the whole collection of these opinions, there is always a prevailing idea or emotion in the market regarding a currency pair. A sentimental analyst is the one who, after finding out this prevailing idea takes the opposite position. He takes this position based on the hypothesis that the idea of the crowd is wrong.
Sentimental analysis has to be used along with fundamental and technical analysis so that a trader can make a prediction by synthesizing all the information he gets based on these three types of analysis.
A more detailed view of the three types of analysis is presented here.