Step 1: Understand the Forex Market
How to Trade Forex – A firm grasp of the most commonly-used forex lingo will make your entry into the market much simpler. Some words and phrases you’ll hear over and over again include:
- Base currency: The currency you are holding. If you’re from the United States, your base currency is most likely the U.S. dollar.
- Quote currency: The currency you are going to purchase.
- Bid price: The price that your broker would be willing to “bid” or “buy” the base currency you are holding.
- Ask price: The price that your broker will “ask” you for in exchange for buying your quote currency of choice. The ask price is always higher than the bid price.
- Spread: The difference between the bid price and the ask price. This is just the broker’s commission.
- Pip: The smallest measurable value of currency movement.
Once you know the forex market, you can read a few forex books. Make sure to check out FxPremiere Forex Guide picks for the Best Forex Books for Beginners. Forex books may seem like they’d be dry, but the authors make sure the reader is entertained and well-informed.
Step 2: Choose the Right FX Broker
Step 2: Choose the Right Broker and Forex Signals Today
Before you begin forex trading or using forex trading signals, you’ll need to choose a FX brokerage firm. Your brokerage firm will help you make trades, and many brokers also offer additional financial services. Working with a reputable and regulated broker can mean the difference between profiting from your trades and losing money between the bid and the ask price.
Don’t be afraid to thoroughly research and read the reviews of a variety of brokerage firms. Not all brokerage firms, so look at our Compare Forex Brokers Page, so make sure its available before you open an account. Working with a broker that offers multiple outlets for customer service is highly recommended for beginning traders.
- : Best for low-cost trading and the largest forex brokers
- : Best overall
- : Best for beginners
- : Best for experienced traders
Step 3: Analyze the World Economy
Making money trading currencies is all about accurately predicting the movement of the economy. To be a profitable trader, you must convert your base currency into a quote currency set to rise in value, then convert your quote currency back to your base currency when the value peaks.
Research the trading positions, GDPs and political climates of countries you are interested in purchasing currency from.
Step 4: Make Your First Forex Trade
Once you’ve decided which quote currency you’re going to buy, it’s time to place an order for your first trade. Your brokerage firm probably provides an online trading software that allows you to place an order to buy or sell a currency.
Using your trading platform, place a market order with your broker. The specifics of your platform may vary.
In a market as fraught with complexity and changes as the foreign exchange market, fx signals offer consistent, calculated returns rather than higher risk strategies. Just make sure to always read the terms and conditions of the signal service provider before subscribing.[/vc_column_text][/vc_column][/vc_row]