The Forex market is a unique financial marketplace. It gives traders the opportunity for both incredible profits and equally incredible losses. Thousands of people daily decide to test their strength or just to try their luck in the financial race, but most of them have no idea where their inflated ambitions will lead them. Before embarking on this dangerous path, we advise you to carefully study the question and weigh all the pros and cons. If after that the desire to try yourself as a trader has not disappeared, we suggest you read the algorithm of actions for the first transaction in the Forex market.
Step 1. Choosing a broker
The choice of a brokerage firm is one of the key moments of Forex trading. Your chances of success directly depend on the trustworthiness of the broker.
Remember that it is brokers, not traders, who trade on the forex market. It is brokers who offer you sets of financial instruments, spreads, and commissions, swaps, quotes, and liquidity. The choice needs to be approached very responsibly so that you do not blame the broker for your failures afterward.
Pay attention to the broker’s rating and reviews on different platforms, but remember that not everything written on the Internet can be trusted. The larger the brokerage firm is, the more clients it has, the more competitors, and they do not sleep a wink. The final decision should be based on whether the trading conditions offered by the broker suit you personally to meet your goals.
Step 2: Installing the trading terminal
Once you’ve decided on the broker, you can move on to the next step – the choice and installation of the trading terminal. It exactly with its help you will carry out trading on the market, therefore it is necessary to choose it with no less responsibility. There are a lot of terminals with different cost and functionality. The most simple free version will do for the beginning trader. The trading terminal can be downloaded directly from the broker’s website. The installation will not take much time or effort. Be sure to study all the functions of your trading terminal before you start trading.
Step 3. Create a Demo Account
Once you get acquainted with all the functions of the trading terminal and feel the excitement, you can move on to the next step – opening an account.
But don’t rush to trade with real money, firstly hone your skills on a demo account. A demo account is a training account for beginner traders.
The basic idea behind a demo account is that you conduct trades with electronic money, without risking real money. A demo account is fully identical to a real account, with the same interfaces, features, and trading mechanics. Even experienced traders do not neglect using demo accounts. Be sure to try it out before you open a real account.
Step 4: Open a Real Account
Finally, after you have carefully studied the terminal, tried trading on the demo account, and made your first profit, you can proceed to open a real account. Congratulations, you are at the finish line! Deposit money into your trading account and start trading. Choose trading instruments you prefer. You could start with popular currency pairs, such as Euro/Dollar or Dollar/JPY.
Remember that “Volume” in Forex is always measured in lots! One lot equals 100,000 units of the base currency
Psychology of Trading on Forex
With the practical algorithm of actions we have understood, now let us pay attention to the main psychological aspects of making deals on Forex. Traders should never neglect psychology in trading. Exactly it helps to understand and predict the competitors’ behavior on the market and, correspondingly, to build own effective trading strategy. Our perception of the market and changes taking place in it are formed under the influence of previous experience and peculiarities of the psyche. Fear, greed, and self-confidence form the patterns of traders’ behavior. To trade effectively, the trader must always control his emotions and adequately assess the situation and not be led by cognitive distortions, falling into panic or euphoria after the next transaction. The result of any single transaction can be considered random. The best strategy – to perceive each separate order separately, regardless of the previous and subsequent.