Getting started with forex

 Getting started

When  it  comes  to  getting  started  in  forex  trading,  there  are  quite  a  few  things that  you  have  to  consider  first.  The  first  thing  that  you  need  to  do  is  to  find  and choose  the  right  broker  to  help  you  in  making  your  trades.

When  you  are  choosing  a  Broker  you  need  to  know  that  there  are  many  FOREX  brokers to  choose  from,  just  as  in  any  other  market.  Here  are  some  things  that  you  need  to look  for  in  making  your  choice:

Low  Spreads

 The  spread,  which  is  calculated  in  pips,  is  the  difference  between  the  price  at  which a  currency  can  be  bought  and  the  price  at  which  it  can  be  sold  at  any  specific  point  in time.  FOREX  brokers  don't  charge  a  commission,  so  this  difference  is  how  they  are going  to  make  money.

When  you  are  comparing  brokers,  you  will  find  that  the  difference  in  spreads  in  FOREX is  as  large  as  the  difference  in  commissions  in  the  stock  arena.  What  this  means  is that  lower  spreads  will  save  you  money  and  therefore,  look  for  a  broker  that  offers low  spreads.

Quality  of  the  Institution

 Unlike  equity  brokers,  FOREX  brokers  are  usually  attached  to  large  banks  or  lending institutions  because  of  the  large  amounts  of  capital  that  is  required.  Also,  FOREX brokers  should  be  registered  with  the  Futures  Commission  Merchant  (FCM)  as  well  as regulated  by  the  Commodity  Futures  Trading  Commission  (CFTC).

You  can  find  this  and  other  financial  information  and  statistics  about  a  FOREX brokerage  on  the  company’s  website  or  the  website  of  its  parent  company.  You  will want  to  make  sure  that  your  broker  is  backed  by  a  reliable  institution.

Extensive  Tools  and  Research

 FOREX  brokers  offer  many  different  trading  platforms  for  their  clients  just  like brokers  in  other  markets  do.  These  different  trading  platforms  often  show  real-time charts,  technical  analysis  tools,  real-time  news  and  data,  and  even  support  for  the various  trading  systems.

Before  you  commit  to  any  one  broker  in  specific,  you  will  need  to  be  sure  to  request free  trials  so  that  you  can  test  their  different  trading  platforms.  Brokers  usually provide  technical  as  well  as  fundamental  commentaries,  economic  calendars,  and other  research  as  a  means  of  assisting  you.  Basically,  you  will  want  to  find  a  broker who  will  give  you  everything  that  you  need  to  succeed.

A  Variety  of  Leverage  Options

 Leverage  is  a  key  necessity  in  FOREX  trading  because  the  price  deviations  (the  sources of  profit)  are  just  set  at  mere  fractions  of  a  cent.  Leverage,  which  is  expressed  as  a ratio  between  total  capitals  that  is  available  to  actual  capital,  which  is  the  amount  of money  a  broker  will  lend  you  for  trading.

For  example,  when  you  have  a  ratio  of  100:1,  this  means  that  your  broker  would lend  you  $100  for  every  $1  of  actual  capital.  Many  brokerage  firms  will  offer  you  as much  as  250:1.

Of  course,  you  need  to  remember  that  lower  leverage  also  means  lower  risk  of  a margin  call,  but  it  also  means  that  you  will  get  a  lower  bang  for  your  buck  (and  viceversa).  Basically  if  you  have  limited  capital,  you  need  to  make  sure  that  your  broker offers  high  leverage.

If  capital  is  not  a  problem,  you  can  rest  assured  that  any  broker  that  has  a  wide variety  of  leverage  options  should  suffice.  A  variety  of  options  lets  you  vary  the amount  of  risk  you  are  willing  to  take.  For  example,  less  leverage  (and  therefore  less risk)  may  be  preferable  if  you  are  dealing  with  highly  volatile  (exotic)  currency  pairspairs

Account  Types

 Many  brokers  will  offer  you  two  or  more  types  of  accounts.  The  smallest  account  is known  as  a  mini  account  and  it  requires  you  to  trade  with  a  minimum  of  maybe  $300.

This  offers  you  a  high  amount  of  leverage  (which  you  need  in  order  to  make  money with  so  little  initial  capital).  The  standard  account  allows  you  to  trade  at  a  variety  of different  leverages,  but  it  also  requires  a  minimum  initial  capital  of  $2,000  to  get  you started.

Lastly,  there  are  premium  accounts,  which  often  require  significant  amounts  of capital  to  get  you  started.  It  also  lets  you  use  different  amounts  of  leverage  and  often offer  additional  tools  and  services.  You  will  need  to  make  sure  that  the  broker  you choose  has  the  right  leverage,  tools,  and  services  that  are  relevant  to  the  amount  of capital  that  you  are  able  to  work  with.