Trading in the foreign exchange market requires a forex broker to implement your trades. Your choices in forex brokers are varied ranging from those that offer mini trading accounts to those that offer you all the forex trading tools you can possibly think of. You do not really need your forex broker to have all these tools. What you need your forex broker to have are the right tools that you can understand and actually make use of in your trading account.
Even with forex brokers that provide the best tools in the market, many of the forex traders still get wiped out of the trading game. These forex traders who lose out on their trades suffer their predicament because they do not understand what they are getting into.
Before you get into the complicated technicalities of forex trading, you have to understand the basics. Most forex brokers offer you the basic tools that you need in order to succeed in forex trading. How you make full use of these tools for your trading account profitability is up to you. Take a look at the following basic tools that are included in most forex brokers’ basket of offerings:
- Practice (demo) accounts: take advantage of this free service that most forex brokers offer. When you use a practice account, you are able to simulate trading without actually putting in your money. Make sure that the practice account that you are trading uses live price data. It is also advisable that you trade your practice account as you would a real account. One of the criticisms about practice accounts is that it does away with the emotional issues a forex trader has to wrangle with in a real account. Being emotional in an actual trade is what usually breaks a supposedly winning strategy. With a practice account, most traders are unemotional about their trades since they are not trading real money. This being so, they are not able to test their restraint on what could have been an emotional trade in actual trading.
- Technical analysis tools: you cannot do away with technical analysis in forex trading. Without taking price action and patterns into consideration in your trades, you would simply be gambling away your money. You need your forex brokers to have real-time charts that you can read and understand. Some of these charts come with expert analysis that helps you make sense of the lines, bars, and candlesticks. Do your homework and learn about the different technical analysis models so you can find one that you can master and put to task in your trading strategy.
- Expert commentaries: the other part of the equation in making trading decisions is fundamental analysis. There are external forces that influence price movements in currencies. News and events can just as easily rock currency values and cause certain patterns to dissipate or emerge on your technical analysis charts. You can make use of the expert commentaries about economic conditions, political events, and other news that might influence the forex market. With both technical and fundamental analysis tools provided by your forex broker, you should be on top of your game as you make your trading decisions.