Beginning on the foreign exchange market is no easy task. This market is, indeed, complex and it is necessary to follow a certain path to hope, in the long run, to realize profits. We describe it in this article.
First step: what is the foreign exchange market?
Forex is the market where world currencies exchange. It is open 24 hours a day, 7 days a week. Currencies are quoted in pairs, either in relation to each other. This includes EUR-USD, USD-CAD, EUR-JPY, etc.
Step Two: How to Make Money on Forex?
To make profits in the foreign exchange market, one must understand how the latter works. Discover the formation of prices, the conduct of a transaction, the role of brokers, risk management, etc.
Step Three: Mistakes not to be committed
It is absolutely not to consider forex trading as a casino game based on luck. To realize profits on the foreign exchange market, it will be necessary to put in place an elaborate trading plan and a strict money management.
Step Four: Open a demo account
Once you start to understand how the forex works, that an effective trading plan has been developed, you have to test it all with a demo account. It is a fictitious money credited account that allows you to trade in a market that is true to the real one but is not in reality.
Step Five: Finding Your Trading Style
In order to predict the direction of currency exchange, technical analysis or fundamental analysis will be used. The first is based on the study of technical graphics and the second on the world economic news. Both analyzes are then effective for you to choose the one that suits you best.
Step Six: Finding Your Trading Strategy
To find your trading strategy, you have to try several and see which one makes you achieve the best results. Scalping, swing trading, intraday, etc. Test them all and choose the most convincing. Once you have chosen, improve this strategy to make it even more powerful.
Step 7: Open a real money trading account
Opening a real money trading account and trading on the foreign exchange market is the culmination of the six previous steps. To trade live, you have to choose a broker. Note that there are hundreds, so we must study this question with great precision.