Friends, relatives and even total strangers often ask me for guidance on how to trade Forex for beginners because they find Forex trading confusing. I do not blame them. I mean, you are not really buying or selling something physical. Instead, you are buying and selling money. Yes, money! And you are using money to buy or sell money!
Confusing? Well, it sounds harder than it really is. Forex trading is buying the currency of one country by selling the currency of another. In other words, you simply trade one currency for another at a given rate. Trading is done in pairs. For example, the US Dollar and the Euro, or Canadian Dollar for the UK Pound.
It is actually very easy to trade currencies, so those of you who want to know how to trade Forex for beginners should not be intimidated. With online brokers like eToro, you can shorten your learning curve with their daily tips, tutorials and practice accounts that you can use to hone your skills before diving in to the real thing! It will even allow you to just copy what the best traders are doing! But I will discuss more of that later.
You may ask, with an average daily turnover of 4 trillion US Dollars (a figure that dwarfs that of the New York Stock Exchange), the price action of Forex trading might be wild. You need not worry because the liquidity of the Forex market is extremely high. Expounding on this a little bit for those who want to know how to trade Forex for beginners, liquidity sort of determines the ease that currency exchange rates can vary in a given period. Extreme liquidity, like that of the Forex market, means that trading volumes can be enormous with minimal effect on the price action.
The market is open 24 hours a day, from the time it opens on Monday morning to the time it closes on Friday afternoon. Tuesdays and Wednesdays are usually the busiest days, with Fridays being the slowest. Tip to those learning how to trade Forex for beginners: take note of the time when the three main markets are open, meaning the trading times of New York, London and Tokyo. Trading is hectic especially during the overlapping times of these markets. [click to continue…]
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Novices in Forex trading might fall into the trap of equating an automatic Forex trading system with Forex robots. After all, we often associate robots with automated stuff. But did you know that automatic does not always mean you need to use robots? Let me explain to you how a Forex robot is just a type of automatic Forex trading system and it’s not the best option available.
