Trading in the currency market or dealing in foreign exchange on a regular basis is quite an interesting hobby. But, did you know that this hobby can also earn you plenty of money. Yes! Forex trading is an excellent source of additional income for people who are willing to put in the time and effort. However, before you proceed towards understanding the details, you need to familiarize yourself with the basics. Here is basic guide for beginners who have been harboring aspirations to make it big in the domain of Forex trading.
Know the terminologies
Yes! This is not at all a complex task. In fact, this is the thumb rule of getting into any trade. All that you need to do is, invest a little time in research and understand the commonly used terms in Forex trading. For example, when you talk about Forex trading, some of the common terms are base currency, exchange rate, quote currency, etc. In the first phase of Forex trading, you should spend ample time on learning these terms by studying about them on the internet, reading books, etc.
Understand a Forex quote
Before you get into real time trading, make sure that you understand a Forex quote properly. In fact, if you have friends who are involved in Forex trading, ask them to guide you in the initial stages. This will prove to be fruitful and help you in developing a better understanding about the trade as well.
Be updated with the currency market
Forex trading is a crucial subject. You need to understand the different currencies and the economies related to them. Start with doing simple internet researches and follow it up with reading reports on the world economic progress. Depending on the performance of the economy, the trader has to take a call on the currency to be sold or bought.
Start a brokerage account
This is a crucial step because you have to choose your brokerage carefully. We would recommend you to opt for a brokering firm with decent industry experience and an overall positive market reputation. You can choose brokers based on references from friends and family or look up the internet for feasible options. Once you shortlist prospective brokers, ask for detailed information on the types of the products that they offer. Also, clarify the trade charges that they associate with every transaction. Accordingly, open your account with a firm that best suits your requirements.
As soon as you have a functional account and all the necessary paper work in place, decide your margins and you are free to start trading!
Source by Urvi Tandon