If you are interested in trading at least to some extent, you have probably heard of
Forex. But if not - Forex is a decentralized platform used for trading all over
the world. It is said to be the largest and most liquid market on the planet, with an average daily trading volume being equal to almost $5 trillion!
But often, people who come to Forex and are new to online trading end up not simply wasting their money and thus start believing that trading is not for them. However, it is possible to Forex trade efficiently if you could spend a bit of time researching the topic and thinking about how trading works in general.
How to Forex trade efficiently and how much money do I need to start trading?
Usually, one of the first questions that come to mind when beginners start trading on Forex is how much money do they need for the initial investment. Mostly, people are looking for exchanges that allow trading starting from $5-$10, but it all depends on the situation,sometimes it might be worth considering different approaches. Some experienced traders have said that it might not be the best idea to start with small amounts on Forex, but rather deposit a higher sum into your account. However, there are no strict rules and you should always do what you feel is the right thing to do – the minimum amount for trading on Forex depends on the trading styles and instruments you decide to use.📊
Trading styles: intraday, positional, and averaged
Trading styles can be classified into three types: intraday, positional, and averaged.📈
- Intraday has a risky and stressful reputation amongst traders. The trader opens short deals and tries to catch the trend on minimal fluctuations and profit from doing so. The most popular currency pairs are EUR/USD and GBP/USD.
- Averaged trading process to be a more thought-out and “calm” approach to trading. With a lot less risk, the deals can be opened from a day to a week. The main characteristic of this style is that you need to analyze the market situation more carefully and be familiar with technical instruments to support your hypothesis.
- Positional trading differs in that most open trades can last for weeks and even months. Traders who use positional trading are focusing on longer-term, thus making their predictions in advance, based on the market situation and past trends. But to access the market correctly, one needs to understand the insights of the industry, financial instruments, and analytical tools, as well as to closely monitor the news and think about how certain events might affect it.
❗️Usually, traders have two approaches for analyzing the market situation: fundamental and technical. The former means that you need to base your predictions on looking at the news and events happening around you, while the latter usually involves assessing previous charts and potential market development based on trading indicators and chart patterns.
How to start currency trading
Now that you are familiar with the types of trading, you can start your first steps in trading on Forex. A popular way to start is to get some currency. But before entering the real world, it might be worth considering looking at demo accounts, which are available on some exchanges – for example NAGA. Trading using a demo account is convenient for those who feel confident enough to try out the knowledge they gained and start trading, but are afraid of losing their money. First of all, trading on a demo account gives a good experience and understanding of how the market works. For a beginner trader, a demo account is a great opportunity to get the first feel of the market and think about your strategies, as well as to try them out.
❗️Regardless of whether you start trading on a demo account or go to the real one straightaway, you will likely start getting better and better the more practice you do – your strategies will become more thought-out and will allow more room for flexibility.
