Choosing a broker can be one of the most difficult things about forex trading for beginners. There are so many to choose from and so can be overwhelming. But there are some ways to make sure that you make the best, informed choice for you and your trading style. Remember that forex trading for beginners attracts lot of business and competition, so it's you who has the power in the relationship!
Forex trading for beginners: what does a broker actually do?
A forex broker is one of the necessary things to start trading forex â everything else is optional and supplementary really. A broker's job is to place trades on your behalf â to execute buy and sell orders at prices you nominate, or at the market price, whichever you nominate. It is their job to place those orders, and transfer the trades to your account â with a small premium for them of course, that's how they make their money after all.
A forex broker may offer many services, or a few â it all depends on who you have chosen to have an account with. These days there are brokers who will do just about everything for you, in a managed account â you deposit the money and they trade it for you. Or on the other hand you may not want them to touch your money, and only want them to place trades when you tell them to. You may want the option of placing trades via telephone or email, or text or by iphone applications â really, brokers offer all sorts of services these days, and it is up to you to shop around to get what you want.
Forex trading for beginners: how much money do I need to get started?
Once again it depends on your broker â shop around and you'll get a lot of different options. Keep in mind that the broker quoting the lowest amount you need to fund an account in order to start trading forex with a real, live account may not always be the best option for you. On the other hand the broker you really would like to go with may require a minimum initial account fund amount of thousands of dollars. It's up to you to weigh up what you want from your broker against what you can afford yourself.
Another issue around money which is rarely brought up in discussions around forex trading for beginners is that you should never trade money you cannot afford to lose. There is so much opportunity to make great money in forex trading that people often forget the fact that the same money can be lost as well. The way I always look at it is when you fund an account with your forex broker you should consider the money lost â don't assume you'll ever get it back. If you do, it's a bonus.
Forex trading for beginners: forex trading education provided by brokers
I know that before I started trading live I thought I knew everything â I had read a bunch of books and ebooks and bought some forex trading courses based on a variety of trading strategies, but I did not have a clue really in hindsight. This is why I would highly recommend going with a broker that provides good, thorough, ongoing training and trader education so you can continue to grow your knowledge base. What they offer will vary from broker to broker, but I'd recommend a broker that will train you according to the style that works best for you.
If you're just starting out in the world of forex trading for beginners, take in as much information as you can in the early days to find a trading style and a strategy that works for you â and then perfect it â become a master of one, and know a bit about the rest. Remember you never stop learning, and your broker can be a good source of information for you in your continuing education. Just remember that brokers may get a commission from pushing certain products and external packages, so just walk in with your eyes wide open.
Forex trading for beginners: don't believe all broker reviews
Something that is very important to remember, especially when you are just starting out in forex trading and you're shopping around for a broker â don't believe everything that you hear about brokers, especially on the internet! In the interests of transparency, be aware that many forex brokers offer affiliate (or partner) programs and other referral schemes which entice people to advertise certain brokers in exchange for a percentage of the money brought to the broker by the referred customer. The percentage of the referring person's cut will vary according to the broker they recommend. So just be aware that the broker reviews you've read may not actually be truthful in that the writer may recommend the broker who promises them the higher percentage of the money you fund a new account with.
Forex trading for beginners: give it a shot, don't be overwhelmed!
It's easy to be overwhelmed, I've felt it to, but persevere. There is no better type of trading on modern currency markets in my opinion. The opportunity for profit is immense, but so is the opportunity for losses â just be mindful of that. Educate yourself, learn all you can and shop around. Don't go with the first broker whose website you happen to visit, and don't believe every broker review that you read â you simply have to shop around and make up your own mind.
Forex trading for beginners can be fun, exciting and profitable. If you take it slow, practice, demo trade for a few months until you've perfected your method and your strategy, you will increase your chances of continuing your success when you move to live trading. Remember that brokers are the messenger between you and the markets â if something goes wrong don't shoot the messenger, the fault will probably lie with either you or the market. Above all, enjoy!