How to trade on Forex market?

Ted Capwell


Where should you start?

In fact Forex is a market like any commodity, stock or one that you go each time to buy fresh vegetables. Among all of them there is a similarity, the only difference in what products and what forms of deals are there.

As Forex is currency market, there is currency. The task of the trader will purchase a particular currency as cheaply as possible and sell as expensive as possible. The difference of purchase/sale will be the profit of the trader. Or he could play in lowering the cost. In other words, when a trader knows that the price of the currency in which it will invest in soon to fall, he sells it more expensively and in a short time back buying, but cheaper. Where the difference in cost will be the earnings.

How much money do you need to start Forex trading?

If you want to day trade Forex, we recommend you to open an account with at least $4000, preferably $9000, if you want to get a decent income stream. Using your account of $4000 and at the risk of not more than 1.1% of it on each trade basis ($50 or less), you can charge $80 + for the day. But there’s a whole bunch of options allowing to try your hand investing even a small amount of funds – beginning with $1. Today, there are many Forex brokers, giving the opportunity to exercise and test their strength on a demo account and earn trading real account. A great option for beginners will be the opening of a demo account:


How the trader earns by trading Forex?

Usually, it is hard to understand the principle of earning on the currency fluctuations, for all those who are planning to work with Forex for the first time. An example will help us to describe it for you better. Imagine that you have opened a trading account in the amount of 200 USD. Suppose you are trading on the currency pair EUR/USD. You set upper and lower limit on the chart of the chosen currency pair, then decide whether to sell or buy. Let’s say you made a prediction about the growth of quotations of EUR/USD June 22. You made the decision to buy the currency at a price 1,2056. As a result, bought 5000 EUR spent 6028 USD (5000 x 1,2056). This is possible due to leverage, which is available to conduct transactions for the sum more than 100 times in your trading account. On 3 July the exchange rate was already at 1.33. After a bit of thought you decide to sell the currency EUR 5,000. In the end of the transaction in your account 6650 USD (5000 x 1,33). Your profit will be equal to USD 1650 (6650 – 5000).


Whether it is legal to trade in the Forex?

Yes. Forex trading is legal in the United States and many other countries around the world. In contrast to securities and futures markets, Forex market is not controlled by any Central authority and there are no clearing houses and no of the arbitration Commission. All members trade with each other based on credit agreements.

Is it safe to trade Forex?

Forex trading, in fact, is not “investment” in the sense that investment is still investment in bonds or stocks. When a trader trades in Forex he invests his money with risk in the investment strategy. However, risk can be managed using trading strategies.