Foreign Exchange Trading - what is that? In fact the procedure is quite easy to understand: You change one currency against another, and profit from the exchange rate.
Forex Trading is exiting as the market is always in move and the rates are always changing. You trade currency pairs, and a slight difference in the exchange rate can make a profit or loss of several thousand dollars. Each currency pair has their own bid and ask price. To make a profit you need to buy a currency pair and then sell it for a higher price later on.
Isn't that a job for financial experts?
No. Everyone can learn forex trading from scratch. There are thousands of tutorials available on the internet and every forex broker provides you with sufficient teaching material - as they want their customers to become successful forex traders.
How do I get started with Forex?
First of all you should register with a Forex Broker of your choice and open a demo account. Just pay attention to these 5 things:
- How high is the spread? The spread is the difference between bid and ask - this is what you have to pay your broker in order to get access to the forex market.
- How high is the leverage? As a beginner you will want to minimize the use of leverage. But as an experienced trader you can trade more money with a higher leverage. If the broker offers a leverage of 1:500, you can trade 500 times your deposit, which is not less than 500.000 with a deposit of 5.000!
- Is the broker regulated? The broker should be regulated by FSA or another institute.
- Can I trade commodities? If you want the ability to trade commodities in addition to currencies, see whether the . broker offers gold, silver, oil and precious metal trading.
- How high is the minimum deposit? A private investor doesn't need to open an institutional account with a minimum deposit of $50.000. There a many brokers available that offer accounts for $25 up to $500 for private investors. Try out these first.
Once you have familiarized with forex trading by trading with virtual money, you can open a real account and trade with real money. Bear in mind that forex trading can in fact be very profitable but it is highly risky as well, and you only should trade money that you can afford to lose. Don't trade with money that you need to pay your rent.
Frank Eschmann lives and works in Germany. He is a professional daytrader and Introducing Broker. He founded his company in 2007 and shares his trading secrets on http://forexbroker-check.com.