subject: Tips for Beginners on the Forex Market [print this page] Forex trading can be a highly rewarding task with experienced traders making a good deal of money each and every day. The Forex market is huge with a trading volume of billions of dollars each day. This has been a major attraction for many traders. However, inexperienced traders who enter the market with inadequate knowledge usually can suffer huge setbacks. This is because Forex trading is inherently risky. It is therefore best to start trading with a demo account with virtual money instead of jumping right into taking instant cash loans to begin trading. The usual recommended demo trading is a couple of months at least. Beginners can then evaluate their own performance and can also decide if they want to get into the currency markets.
A common mistake made by beginners is to use too much leverage. The Forex market provides huge leverages and it is dependent on the broker. Usually, the value of the leverage is anywhere from 100 to 500. This greatly magnifies the profits that traders make, but unfortunately it also magnifies the risk by the same amount. Inexperienced traders get carried away if they make some profit in the market and then use large leverages, only to see all their money lost. It is therefore important to be able to evaluate a trade based on the risk factor. If there is a strong indication for the action that the trader is taking, then a higher leverage can be used but if the signals are not too strong, it is best to minimise the risk and go for lower leverages.
To start as a Forex trader, one will usually need to register with a broker. There are a number of brokers out there that can help set up a new account. There are no brokerage fees in Forex trading. The broker makes money through the buy-sell spread that is present each time someone buys or sells a currency pair. It is best to choose brokers with a low spread in order to maximise profits. Also, almost all brokers let their members trade with virtual money but on the real market. This is very important because it gives a familiarity with the trading platform, the software and most importantly, the Forex market. Some brokers give a small amount of real money for new members to begin trading. If not, one can take instant cash loans and begin trading with small amounts of money and gradually increase this amount.
