Whatever your reason to get into forex trading, there are a few things you ought to know before you begin. You don’t want to run before you can walk – you don’t want to play fast and loose with your hard earned cash, not just yet anyway.
Before you start trading you need to learn all you can about forex, about the markets as well as try out different trading strategies. Which is why a forex demo account is a great tool.
Because if you jump in and try and learn on the job, it can be an incredibly costly mistake. But before we get to that, let’s start at the beginning.
Why do you want to trade
One of the key questions to answer before you begin trading any money for real is: what is your reason for trading?
What do you hope to get out of trading? Is it something you want to do regularly? Every day or a couple of times a week?
There is no right answer here, it just helps to know what you want to get out of it, in order to know what to put in.
Choosing your forex trading platform
As a trader you’ll need a broker to facilitate your trades. A broker is the link between you and the sellers
When choosing your broker, you’ll want to know a few things, namely:
- How secure is your investment – is the broker a registered member of their country’s regulatory body?
- Jordan: Jordan Securities Commission (JSC)
- United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
- United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
- Australia: Australian Securities and Investment Commission (ASIC)
- Switzerland: Swiss Federal Banking Commission (SFBC)
- Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
- France: Autorité des Marchés Financiers (AMF)
- Canada: Investment Information Regulatory Organization of Canada (IIROC)
- Their internet presence – you’ll want a reputable broker with a good standing.
- The fees – such is life, no matter what kind of forex trader you are, you’ll always be subject to transaction costs. Every trade you make you’ll have to pay for, so check the broker’s fees beforehand as you don’t want to hand over all your hard traded money. Understand the fees and charges that they’ll apply to each transaction so you can make the most out of your investment. Don’t forget, sometimes you might have to pay a bit more to guarantee a more reputable broker.
- Access to your funds – do you have easy access to your funds? Can you deposit and withdraw cash without any hassle? There’s no reason why it should be hard for you to get access to your profits, the only reason you deposit cash with a broker is to enable your trading. So if they are making life difficult, walk away.
- Their trading platform – in online forex trading, all of your trading will happen through your broker’s platform, so ensuring this is user-friendly is vital to your success. Does it give you a free news feed with up to date information? Are their charting tools easy to use and read? Is it intuitive for you to trade properly?
- What is their training like – if you’re a beginner to forex trading, having a broker who can guide you through the process and teach you the tricks of the trade is going to make you feel confident in what you’re doing.
- The level of support – whether you’re a newbie or an old hat at trading forex, no broker platform is perfect and so you need your chosen trading platform to have a decent level of support to assist you, should any problems arise. Check out online reviews about the level of their customer service, because they may be all smiles and charm to get you to open an account, but have awful customer service once they’ve got you onboard.
- Their demo account – every broker has an online forex platform, this is the technology that you’ll be using to trade. It enables you to view quotes, to see the charts, to do your research and to place your trades. Make sure you test out various platforms and open a demo account with them prior to choosing your broker.
Forex demo accounts
As you narrow down your selection of online forex trading platforms, you’ll want to play around with their demo accounts. A Jordan forex demo account will allow you to practice forex trading risk free. It’s a paper trading account where you can practice trading or test out a new trading strategy without having to risk any actual money.
A forex demo account is where you can learn to trade using live buy and sell prices, where you can understand how to place your trades, how to manage existing trade positions and tweak your trading strategy.
Why do you need to test and adjust your trading strategy?
Because one approach won’t work for all trades. You’ll want to figure out your prefered strategy and test it out using fake money trades and analyse the results of your trade to see if your chosen strategy is likely to produce you a profit, when done for real.
If a particular strategy doesn’t work, then you’ll have lost nothing and learned how not to do it.
But saying that, making a large return on your fake investment doesn’t necessarily translate through to the real world. Just because you made money once, doesn’t mean you’re guaranteed to do it again – real money profits might not come as easily.
Forex trading is not just exciting, it can be incredibly lucrative.
However, don’t forget, at the end of the day your investment can go down as well as up. And you need to remember that.
Learning to trade is one thing, but practice makes perfect and you’ll want to practice, practice, practice with a forex demo account if you don’t want to lose money making silly mistakes.