It is likely that you have been hearing a lot about the Foreign Exchange market in recent times and the advantages it offers for traders to make profits. This short guide will tell you about the basics of the Forex markets and what you will need in order to take part in this rapidly expanding investment area.
The Foreign Exchange Markets (Forex for short) are a global market where currencies are exchanged and traded. This make used to be the preserve of large market plays such as National and private Investment banks. However in the 1980′s changes to the regulation of these markets opened the doors to the smaller investor. The availability of leverage through the use of Margin accounts now allows the small trader the ability to control standard lot sizes in the markets.
While you can now trade the markets easily it is not so simple to make a profit. It is important to invest some time into learning about the markets and understanding the risks that are involved. After all, in any profession, to get to the top you will need to have the knowledge to succeed.
The first thing you are going to need is an account with a Forex broker. These will handle your transactions in the market. There are a great many brokers to chose from but try to ensure you pick a reputable one that operates under financial regulation. This will help to protect you from fraudulent practices and broker financial problems.
Opening a Forex trading account with a broker is easy. You simply need to fill out your application form and supply the necessary ID in order to verify your identity. You will then be able to fund your account and begin trading. Mini accounts require the smallest opening deposits which many brokers now allowing you to start trading with as little as $50. Standard accounts will mostly have a higher deposit requirement, typically $1000 dollars. For this you will probably gain access to a higher level of leverage to allow you to control a greater position in the market.
However before you jump in and start trading with a live account it is advisable to practice your skills first. Paper trading as it is sometimes referred to is the practice of simply logging your trading performance without actually placing your money on the trades. This is made easier by the use of demo account. These are supplied by most brokers and will allow you to track your performance for up to 30 days without the need t open a live account. In this way you can try out some strategies first to see how they perform. Then if you are happy with the performance you can then progress to opening a live account.
In addition to being able to try out strategies these accounts are also useful to help you try out a range of Forex tools. There are many places where you will find out information on particular trading strategies to make use of and an abundance of tools such as live quotes, charts, economic calendars and news feeds that you can make use of to aid you in your trading.