4 February 2020
How much do you need to know before trading forex
Gaining access to forex trading platforms is relatively easy and it is possible to begin forex trading without any preparation or knowledge at all. However, trading without at least gaining a working knowledge of forex is a recipe for disaster. If you are serious about forex trading there are some essential concepts that you need to come to grips with. These concepts are:
- Forex trading is all done in cyberspace. Currency does not physically change hands. Orders are placed for particular currencies and profits and losses are allocated against your account line with currency price movements.
- Trading in forex is not an investment strategy. Investments are made with a long-term view whereas forex trading is done with a view to make short term profits on market fluctuations.
- You need to understand the power and risk associated with leverage. Most major currency pairs fluctuate in a fairly narrow range of up to 3% which won’t usually generate huge profits or expose you to significant risk. Leverage changes the situation markedly by multiplying gains and losses by up to 50%. Forex brokers like USG can allow leverage trades of up to 50:1. Understanding how leverage works, the potential profits it can generate and the safeguards you can employ to minimise losses is paramount if you want to trade forex successfully.
- A full understanding of the factors that affect the currency pairs that you plan on trading in. A trading pair as the term suggests is a pair of currencies that you trade in. Common examples are EUR/USD, AUD/USD and USD/JPY. There are many factors that influence movements between currency pairs and each currency pair will behave differently to different stimuli. It therefore makes good sense to choose only a couple of currency pairs to focus on and study the relationship between them as well as the factors that affect the relative strengths of each currency. It is critical when analysing currency pairs to have a firm grasp of the economic factors affecting each currency. Key dates concerning interest rate movements and budgetary announcements should be diarised and watched closely.
While there may seem to be an awful lot to know before trading forex, the good news is that you can start learning about forex trading by opening a demo account and familiarising yourself with how everything works. USG provide this facility as well as providing ongoing education and training that will help prepare you for the real world of Forex. USG provide regular updates, seminars and even one on training to account holders and want to give you every chance of achieving trading success.
The first step to knowing enough to start trading Forex is to open an account with USG and to take advantage of the wealth of training available. Getting the right education in Forex is perhaps the key to success as a trader. The USG Forex traders course is in our opinion the most comprehensive and personalised traders course available, covering every conceivable aspect oft trading including:
- Market analysis
- Trading psychology
- Risk Management
- Trading strategies
Get the right Forex education starting today and when you’re ready to start putting that training into practice using a demo account and when you are confident enough to enter the market, you can do so secure in the knowledge that you are prepared to trade forex.