The financial markets are filled with instruments you can use to grow your wealth. The stock market is always exciting if you are looking to strike a balance between short-term gains and long-term growth. Commodities are just as exciting, especially now that mainstream brokers have begun offering cryptocurrency pairs on their platforms.
The forex market, however, is the most exciting of them all. The forex market is filled with opportunities to make money. You can even grow your investment regardless of market direction, as long as you are going with the market instead of against it.
Nevertheless, entering the forex market is something that you need to do with extra care. While the opportunities are lucrative, there are also risks to manage and basics to cover. In this article, we are going to go over everything you need to do when approaching forex trading as an investment opportunity. Let’s get started, shall we?
Find a Broker
Before you start learning about the market, reading about fundamentals, and planning your forex investments, you need to spend some time finding a broker that suits you best. There are hundreds of brokers to choose from, plenty of trading platforms to try, and even deals and special offers to benefit from.
To simplify the process of finding a good broker, use the resources provided by InvestinGoal.com. The site is filled with broker reviews and details, including reviews of top names like Plus500. InvestinGoal also provides trading basics, information about the different platforms offered by brokers, and even tips and tricks on how to invest your money in different instruments.
Finding a broker early in the game leads to one major advantage, which is….
Create a Demo Account
Demo accounts are your best friends when you are entering the forex market for the first time. As the name suggests, demo accounts let you trade using real platforms and against actual market prices, but without actually risking your real money in the process. The way you set up your demo account, however, matters.
Rather than getting an account with $1 million in simulation money, set up the demo account to better reflect the amount you want to invest. For example, you should create a demo account with $5,000 if you are planning to invest that amount into the forex market once you are ready.
Using the demo account, you can begin learning about the market. Nothing beats learning by doing and demo accounts let you learn about the forex market at an incredible pace, since you are actually doing real trades. You can test indicators, learn how the market reacts to news and announcements, and even do some test trades to develop your own strategy.
Return to the Basics
After giving the trading platform a try with the demo account, returning to the basics and learning more about forex trading will be a lot easier. You already have the experience needed to understand how the market works. You have also tried the trading platform in real-time. Learning about fundamentals is an easy challenge to tackle at this point.
While you are at it, find sources of news, particularly news that affect currencies you want to trade. There are hundreds of currency pairs to choose from, but that doesn’t mean you should trade them all. It is best to focus on a handful of pairs that relate to each other so you don’t have to analyze a lot of fundamentals to get the market right.
In fact, limiting your focus to one or two pairs is recommended. Trading EUR/USD and GBP/USD means you only have three currencies to pay attention to, so you’ll have an easier time keeping up with market changes in the long run. Besides, the two pairs affect each other, so you can use the same approach with technical indicators.
Formulate a Strategy
Another important thing to note when approaching the forex market is the need for a plan. You want to know exactly why you enter the market and why you decide to exit. More importantly, you need to know when to enter and exit the market. A trading strategy goes beyond what technical indicators you use or how you analyze the market.
Trading with a strategy gives you complete control over your trading experience. You will not fall into the trap of trading emotionally due to a bad loss or a big profit, since you already have a strategy to follow. When you do decide to cut your losses or close a trade due to a Stop Loss, you know exactly why the decision is made and the risk you have to absorb.
A trading strategy is the last piece of the puzzle. Once you have a clear strategy in mind, you are ready to start investing your money in the forex market. Switch from you demo account to a live one and begin banking pips. You’ll have a stronger portfolio with forex as one of the instruments you use.