The aim of this article is to teach you how to trade forex and make money from it. The process is quite simple.
First you need to learn the terms used when trading. Then, choose the instrument you want to trade.
Finally, find a good broker to start trading. If you’re think you are good with numbers and have some talents in the financial field, give forex trading a try. It’s a good way to make a sustainable income.
BEST FOREX BROKERS | LEARN THE TERMINOLOGY
- The most common instrument chose is currency pair. A currency pair consists of a Base and Quote currency. Take EUR/USD as an example.
- The currency on the left (EUR) is the base currency and the other on the right (USD) is the quote currency.
- When you trade a currency pair, you sell the base currency to get the quote currency.
- How much you’re going to receive depends on the exchange rate at the time you trade.
- For example, let’s say the exchange rate of EUR/USD now is 1.3525. That means for every EUR you sell, you will get 1.3525 US dollars.
- Long means buy. Short means sell. When they say long/short positions, that means buy/sell positions.
- There are Bid price and Ask price. Bid price is the price brokers accept to buy from you.
- It can be seen as the best price at which you can sell your Base currency. Vice versa, Ask price is the best price you’re going to get when you buy the Quote currency from a broker.
- Bid price and Ask price, at one moment, are not the same. The difference between them is called Spread.
BEST FOREX BROKERS | PICKING CURRENCY PAIRS
Now you know what you buy and what you sell. How to make use of that? Do you know what currency is the best to buy or sell or when is the best time to buy/sell them? Here are something you should pay attention to:
- Economy status
Then you buy the GBP for a cheap price and wait till their economy recovers so that you can sell it to make profit.
Check the inventory of a country. If it has many products that many others need, then it will be likely to sell them.
Thanks to the sales, that country’s economy will grow stronger. As a result, its currency’s value will rise. Then you can sell that currency for a higher price.
Sometimes politics can contribute to the rise and fall of a currency. When a country faces challenges or serious problems, their currency value tends to fall. Keep up with news.
When you see a government passes a policy that helps the economy, their currency is very likely to rise.
BEST FOREX BROKERS | CHOOSING A GOOD FOREX BROKER
You trade with the best forex brokers; therefore, choosing a reliable and competent one is very important. Here are the standards for a great forex broker:
In the forex market, to protect traders, brokers are compulsory to get regulations which are issued by authorized organizations having a big voice.
It is difficult that traders in Asia or Africa cannot ask their government for the guarantee in case of any troubles; the government in most countries there does not accept the forex trading as the legal industry yet.
Therefore, traders should choose brokers who own trusted regulations like CySEC and FCA.
- Trading cost
After filtering trusted brokers, traders will consider other factors and the trading cost is the next one.
The trading cost is the main point which brings traders higher profit, so everyone prefers brokers with the lower offer, obviously.Spread, commission and minimum deposit are items of the trading cost get attraction from traders.
- Trading conditions
Brokers must have all types of account that suit all levels of trader. Moreover, they must offer high leverage, good payment system, low margin, low swap, and less slippages.
- Customer support
No brokers can develop and even survive if they do not pay attention to customer services. Nowadays, brokers have a lot of competitors with benefits and endow supplied traders.
As a result, in order to make customers pleasant, brokers need to set up customer services system well. 24/7 online center, websites, and local offices are the strategic elements to invest.
Besides English, brokers do not forget to provide different languages because many traders might not be good at English. Briefly, being available all the times to support customers in time should be the top priority of brokers to build customer trust.
There you have it. The basic guide on how to trade forex. If you have some money and want to give forex trading a try. Let’s start today.