Unlike the stock market, Forex trading does not happen at a physical location nor does it have a central exchange. Hence, a Forex trader can trade wherever they are, 24 hours a day for 5.5 days a week! No wonder that Forex trading is so attractive to many new investors.
To start Forex trading, you would first need to open an online trading account where all your currency transactions will take place. Opening a Forex account involves three simple steps:
- Choose an appropriate Forex trading site
There are two things to consider when choosing the right Forex trading site for you. First is the leverage the site offers. Each site offers different leverage, which can range from 50:1 to as high as 250:1. A leverage factor of 50:1 for instance, would allow a person with USD 1,000 in his account to trade USD 50,000 in the Forex market. While this could allow you to make large gains with small investments, it can also amplify your losses if a trade moves against you. It is important to understand the risks involved in determining your intended leverage. Also, the trading site should be commission-free, as you do not need to go through a third party, like brokers for stocks. Examine the site properly before you decide to make sure they offer features that you need.
- Choose an suitable account type
Forex trading accounts come in different sizes, ranging from USD 25 (micro / mini accounts) to USD 10,000 (standard accounts). Choose the account size according to the amount you want to invest in. Choose Forex trading spot account, which allows instantaneous trades and is more popular, instead of a futures account.
- Register for a Forex trading account
Most of the registration is done online and would require your personal details as well as your credit card details for real cash trades. Make sure you enter your email address properly.
- Activate your Forex trading account
You would be asked to verify your details through several steps. Make sure you read through and understand the terms and conditions before you sign them online. Pay particular attention to the operating hours of the site, the availability of live technical support and any hidden commission / charges. Some sites also offer a limited-time demo account with no real cash involved. You can use it to familiarise yourself with Forex trading before you trade with real cash.
Congratulations! You are now ready to hit the Forex market!