How to Trade Forex – 4 Tools of the Trade for Every Newbie
People who want to learn how to trade forex nowadays are in luck because of the availability and accessibility of information through online sources. Getting educated on the basics of forex trading is made easier with hands-on practical applications that simulate actual forex trading scenarios. With such tools available, people are able to sample forex trading without actually having to put up funds right away to purchase currency pairs. Once they feel that they are ready to get into the real thing, they can just as easily shift to a live forex trading account.
Forex trading involves a process of buying and selling currency pairs selected from a long list of currencies all over the world. This buying and selling activity is determined by the value of the currencies at any given time and some expectancy as to price movements. Trading currency pairs can happen within minutes and traders cannot afford to wishy-washy decisions. Even before they engage in any real forex trading activities, it is important that they have the right attitude and knowledge necessary in learning how to trade forex currencies.
Once a newbie forex trader makes the decision to pursue active forex trading, he will need several tools to make his trading activities more rewarding. Here are some of the tools of the trade for every newbie who learns how to trade forex currencies:
1. Trading Platform – this basically gives newbie traders all the information that they need about the currencies and how they are performing. Trading platforms are online and updated in real time about currency values and trading account movements. Forex traders are able to see how their currency pairs are performing through their trading platform.
2. Charting Program – a charting program is normally thrown in with the services of a forex broker. These programs indicate price movements in graphical form so that traders can gauge the direction of currency pair values and make decisions on what to do with his portfolio of currency pairs. This kind of forex trading tool helps in doing technical analysis to help determine entry and exit points for particular forex currency pairs.
3. Demo Account – such an account can be held even when a forex trader already has a live forex trading account. This could serve as a testing ground for trading strategies as well as a parallel program to a live account to check how particular trading decisions would pan out. Some demo accounts are available for free but with limited capabilities and functions. There are also demo accounts that can be used for a fee.
4. Trading Account – All active traders should have a trading account after they learn how to trade forex currencies. This is where the trader’s portfolio of currency pairs is held along with his investible funds. About $10,000 is the minimum required to have in these accounts for live forex trading. An alternative for those who do not have much money to spend on live forex trading accounts would be to choose mini trading accounts that allow them to start buying currency pairs with an account size of about $300.
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