Forex refers to foreign exchange. As such it is a business where you exchange currencies from around the world for profit.
With the increase in forex brokers and success stories from day traders around the world, lots of people in Singapore are now entering the forex trade. Another reason that causes more and more people get into is that Singapore is a leading financial hub of the world. Therefore, there is more information about opportunities in the global finance market.
You can follow the following steps to trade forex successfully.
Pick a broker of your choice
This is the first step to trading forex. A forex broker is a market intermediary who allows retail traders access to the market. This is made possible through a trading platform. A trading platform is a web portal through which a trader can view the market. You can also deposit money, place a trade and take your profits or loses once a trade is complete.
The broker provides you access to the market through a demo account or a live trading account. A demo account contains virtual money while a trading account contains real cash that belongs to the trader and can actually be lost in the trade.
Practice if required
Brokers also allow you to practice how to trade. This happens in the demo account that has access to the prevailing conditions of the market. The demo account allows you to try out the market without risking any of your money.
In the demo account, you have virtual money provided by the broker to test out your strategies and skills in forex trading.
Understand the trading language
Forex trading has its own vocabulary. It is imperative that every trader understand the language used when trading. This increases your chances of making a profit rather than a loss.
You should understand terms such as base currency which indicates the basis of a forex transaction. The base currency is usually the currency on the right of a forex quote and is the currency you are trading with.
Spread is another technical term in forex trading. It refers to the difference between the bid and ask price. The bid is the price at which you sell your currency while ask is the price at which your broker will offer your currency to the market. A pip is how much your currency moves in any position.
These terms are quite confusing to beginners but are understood clearly with more practice.
How to make a profit
After having identified a forex broker and taken enough time to practice and understood the basics of the language used in forex trading, you are ready to start earning profits from your trades.
Deposit your money in your preferred currency to the trading account provided by the broker. Place a trade whether in a long or short position after careful analysis. Set your take profit and stop loss position.
Take profit defines the point at which you feel that your trade has returned acceptable profits. A stop loss position indicates that point at which you want you want your trade to stop losing money.]
With these two positions identified, if your trade goes positively you make a profit else, you will make an acceptable loss.
Develop a unique trading strategy
Forex trading requires that every trader have a specific and unique trading strategy. Trading strategy refers to the techniques that a trader uses to ensure that their trades are profitable.
This involves the trader’s mindset and emotions. Forex trading requires that traders are devoid of any emotional attachment to currencies, trades or profit positions. Traders should also take their profits and losses at predefined positions.
With these tips, it is now possible for a beginner forex trader to make a profit from a particular trade. Proper information, knowledge and trading techniques are the main factors in developing to a successful forex trader.