Whether you are new to investing or a seasoned pro, Forex trading offers new possibilities in a market that remains largely untapped for most investors. Despite being the largest investment market in terms of volume, very few investors have money in Forex trading market. That is a shame, as jumping into Forex trading can provide a big payoff – and getting started is much easier than you think. Consider these top tips.
Know the rules. Forex trading has no central authority that regulates the trades or guarantees results. There is no agency with which you can dispute an error. So it pays to know the rules when it comes to investing. Fortunately, there is a way to make this trading far more trustworthy – become a member of the National Futures Association, and you will be working with highly reputable institutions. Knowing the rules also means realizing that this is a different playground than the stock exchange. There are no limits and there is no commission. Yes, seriously.
Go easy at first. Pick a pair and get started. You don’t have to know everything there is to know about currencies to get started. The majority of trades are only done with a few major currencies, so chances are extremely good that you already know a little about those to start with. That said, pick your pair of currencies, say, the US dollar and the Japanese yen, and stick with that for a while until you get the hang of how trading works. Track your results. Learn to read your results before you move on to other currencies.
Start small. This piece of advice works well whether you are trading in the currency exchange or the stock market. Start small by never investing money you cannot afford to lose. You can and will make rookie mistakes. But those will teach you how to play the market more effectively. Still, consider it your “play money” – not the mortgage payment.
Understand how leverage works. One of the brilliant things about Forex trading is that you can leverage your position. This means you can actually speculate on more money than you have to put down as an investment. The pay out can be incredible. On the other hand, if you don’t take the time to understand leverage, your losses can be unnecessarily bigger.
Bottom line? Take the time to learn the basics and get started. You have a lot to gain.