Also known as “Foreign Exchange“, forex trading is a type of trading that entails exchanging one currency for another currency at an agreeable exchange price on the OTC (over-the-counter) market. It is regarded as the world’s most traded market with an average turnover of $44 trillion a day.
Please continue reading until the end and you will be well-acquainted with the nitty-gritty stuff by the time you are done.
Beginner’s Guide To Trading Forex
If you have decided to trade forex but you are clueless on where to start, here is a beginner’s guide.
1. Learn the basic concepts.
Below are some of basic concepts that you need to understand if you are looking forward to trading.
- Base currency. This is the type of currency that a trader is getting rid of or spending (For instance USD or GBP)
- Quote currency. This is the currency that the trader is purchasing
- Exchange rate. This is the rate that tells a trader the amount of money to spend in quote currency in order for them to purchase base currency. For instance, 1 GBP/USD1.589.
- Long position. The position means that a trader is willing to purchase the base currency and then sell the base currency
- Short position. It means that the trader is ready to purchase the base currency and at the same time sell the quote currency.
- The bid price. This the best price at which a trader is ready to sell their quote currency on the market.
- Ask price. It is also referred to as the offer price. It is the best price at which a trader is willing to purchase from the market.
- Spread. This is the difference between the ask price and the bid price.
2. Decide on what currency you want to purchase and sell.
This is something that a forex trader must do. When deciding on the type of currency to purchase or sell, you need to make predictions about the state of the economy, consider politics and also read economic reports.
3. Open a brokerage account.
To do this, you will have to pick the best broker from scores of brokers out there. Here is a guide on how to pick the best brokerage that is worth reading before you set out to pick a broker
- Look for a broker with over 10 years or more experience in trading forex specifically. Experience shows that the broker knows how to deal with clients and is an expert.
- Choose a brokerage that is regulated by a renowned oversight bodies. For instance, the oversight bodies in the US include NFA(National Futures Association) and CFTC (Commodity Futures Trading Commission). While in the UK, the major oversight body is FSA (Financial Services Authority).
- Read reviews not only to get acquainted with as many brokers as you can, but also to get to know how clients are saying about different brokers. Thereafter, you can settle for the broker with the most positive reviews since it is a sign that clients have trust in such a broker.
4. Start trading.
Once you have opened an account with a broker, you are ready to start trading. But before that, you need to analyze the market using different methods such as technical analysis whereby you will have to review historical data or charts so as to predict how the currency you will trade will fair based on past events.
A forex signal can be defined as a trade suggestion for the currency market, which is usually at a specific time and price. The signals are obtained from firms that specialize in providing this service. Once a trader subscribes to trading signals, they are able to diversify their trading by the virtue of mirroring the trades of investors with a proven track record. Signals are largely classified into three groups namely.
- News trading signals. These signals offer a fundamental approach to trading signals. They are tailored at helping a trader get news release as early as they can, and thereafter exploit the news release to maximum profit within the shortest duration possible. These signals come with some commentary as well as analysis on daily and weekly basis.
- Technical signals. These signals are just trading tips that are offered on basis of technical analysis. As a subscriber, you are supposed to trust the track record and background of the provider offering these signals.
- General trade signals. The service offers general trading tips to traders. Their alerts utilize a multi-pronged approach that combines both technical and fundamental analysis.
Top Forex Signals Providers
The decision to choose a signal provider is arguably the most important decision that you will have to make if you are thinking of trading. To save yourself the daunting task of choosing a reliable signal provider from numerous providers out there, it is imperative you familiarize yourself with the best signal providers. Here is a comparison table of the best signals providers right now. The providers are ranked according to customer rating, price, reliability as well as overall performance. Please go through the table and if possible visit the website of each provider so that you can pick the provider that is in the best position to meet all your needs.
|Forex Trendy||5/5||Website, Review||$3 per week|
|Forex Mentor Pro||4/5||Website, Review||$49.95|
|Vladimir Forex Signals||3/5||Website, Review||$77|
|Forex Striker||2/5||Website, Review||$147|
|OmniForex Signals||1/5||Website, Review||$4.95|
Forex Signal Providers Reviewed
By reading through numerous reviews that are posted on the websites of professional traders, you can get plenty of information that you need in order to make the best choice possible when it comes to choosing a reliable signal provider. But nowadays, it is rare to come across unbiased reviews owing to the fact that most of the reviews on the web are sponsored by signal providers as one way of marketing themselves and their services.
As such, it is prudent to read unbiased and professional reviews which are compiled by traders who have tried the signals themselves. Below are unbiased and detailed reviews that are written from both a beginner’s and professional trader’s perspective. These reviews are worth reading if you are looking forward to subscribing to a forex trading signal service.