It’s no coincidence that the global forex market has grown on the back of sustained technological advancement, with the amount traded during each 24-hour period having recently peaked at $6.6 trillion.
While the advent of online and mobile trading platforms may have broken down many of the historic barriers to entry and empowered part-time traders across the globe, however, it has also spawned a dramatic increase in the number of rogue operators and created an unhelpful abundance of false information sources online.
Remember, the volatile nature of forex trading can be challenging enough, with between 70% and 90% of all currency investors losing money overall. With this in mind, how can you look to get started in the forex market and what are the key things to look out for?
1. Learning Your Trade and Identifying Viable Sources of Data
Let us start with the basics; you cannot hope to succeed as a forex trader without developing a viable base of knowledge and a keen sense of determinism.
Make no mistake; the former provides a solid foundation on which you can build viable trading strategies, while the latter enables you to understand the underlying laws that govern price fluctuations and avoid emotive trading over time.
You can draw knowledge from various sources, in the form of everything from seminars to paid academic courses. However, it’s imperative that you’re able to access reliable data sources, with the best options often found on market leading forex sites.
In the UK, these entities should be fully licensed and regulated by the Financial Conduct Authority (FCA), while they’ll offer direct access to extensive data tools such as real-time charts, breaking news feeds and comprehensive technical indicators.
Such platforms are also home to datasets such as global economic calendars, which enable you to adopt a more proactive approach and hone your trading strategy in line with real-world events and macroeconomic developments.
2. Make the Most of Demo Forex Accounts
When you access data and register for an account at a reputable forex broker such as Oanda, you’ll also be afforded access to a so-called “demo trading account”.
This essentially offers you access to a simulated, real-time marketplace, in which you can encounter accurate market conditions and hone your strategies without being required to community your hard-earned capital.
You can usually use such an account for a period of between three and six months, during which time you’ll develop practical market experience that puts your theoretical knowledge and real-world data into a viable context.
It’s crucial to go through this learning process when accessing the forex market, as it can often make the difference between failed and successful traders.
3. Start Small and Grow Your Venture Organically
When the time does come to start trading for real, it’s absolutely key that you start out small and by trading just one or two strategically selected currency pairings.
Your selection should be based on factors such as your outlook and appetite for risk, with options such as the USD/JPY offering relatively sanctuary and a viable safe-haven in a volatile marketplace.
From here, you can look to scale your forex efforts in line with experience and profitably, as you focus on growing in a way that’s both manageable and viable in the prevailing climate.
Over time, you can also look to diversify your portfolio further and trade alternative assets, so long as you don’t look to rush the process or put your capital at the mercy of huge and disproportionate losses.