For some reason, a lot of people get the idea about trading the market and get completely lost in finding out how to trade. A default thought always seems to be that you need to call your bank, buy ‘something’ with one of the stock brokers there and get advice on what you should do next; from the stock broker. This could not be further from the truth. If you want to be a successful trader then you need to take part in Forex trading yourself. Never rely on the advice from people you don’t know or whose success you are unsure of. Simply put, the best person to advise you how to trade is you.
In order to take part in Forex trading you will need to sign up with one of many Forex brokers. This is all free so you don’t need to worry about putting up any administration costs. There are hundreds; if not thousands of Forex brokers around the world so you need to do a bit of research to find the right one for you.
The first thing you need to do however; before you even start your Forex trading; is to learn how to trade. This is just like any other job and it should be taken seriously. The market is not a betting playground where you rely on luck although those that fail tend to disagree. You will need to develop a wealth of knowledge on how to read the market and which strategies to use. Once you have that covered, it is time to look for qualifying Forex brokers.
In order to trade (once you are signed up) you will need to use a trading platform. Most brokers use the same standard platform such as MT4/MT5 or their own. To see how you get on with the platform it is just a simple case of signing up to a demo account but you should be able to use these quite easily. The real question is – how cheap can they make your trading? For example, some brokers charge a commission on all trades placed coupled with low spreads; claiming they are the cheapest option. Some offer a fixed spread with no commission; they too claim they are the cheapest. Again, it is up to you to find out which ones are the cheapest based on the currency pairs you are willing to trade.
Types of brokers
Lastly, you will need to decide which type of brokerage you would like to have an account with. There are two main types – Market makers and ECN brokers. Market makers basically decide what to charge for the bid/ask spread themselves while ECN brokers provide low spreads direct from the Interbank market (consortium of banks and hedge funds that decide the price of the spread). As ECN brokers charge this low spread they will charge slightly more commission and you may have to put up quite a lot of investing capital first. However, you need to weigh up both options before you start. Majority of beginners tend to choose the market maker as the investment capital required is quite low so you may want to start there and see how you progress to trade with the bigger broker.