With a daily trading volume of around $5.1 trillion per day, the forex market remains one of the most popular and lucrative financial entities imaginable.
This is also a volatile and changeable marketplace, however, and one that can be exceptionally difficult for novice or inexperienced traders to crack,
In this article, we’ll offer a brief beginners’ guide to novice traders, while appraising the actionable steps that can help you to get started.
1. Understand the Knowledge and Determinism Equates to Power
When you first approach the market, you need to understand that knowledge and determinism are the most powerful weapons in the forex trader’s armoury.
Knowledge enables you to understand the core functionality and mechanisms of the forex market, for example, from the way in which currencies are traded to the investment vehicles that allow you to negate the burden of ownership and optimise returns.
A keen sense of determinism also ensures that traders understand the universal laws that govern change in the forex market. As a result, they can make informed decisions without allowing emotion or unexpected market shifts to undermine their core strategies.
2. Translating Theoretical Knowledge into Practical Experience
Once you’ve created a foundation of theoretical knowledge and a fundamental understanding of the market, the next step is to translate this into practical experience.
One of the best ways to achieve this is to leverage an established online trading platform such as Oanda, which offers so-called ‘demo accounts that allow you to practice forex trading a simulated, real-time market environment.
This type of resource can be used for a period of up to six months, while it lets traders deploy their carefully honed strategies and test these without risking their hard-earned money. This means that you can make your mistakes in a controlled environment, and one that does not force you lose significant sums of cash.
3. Learn How to Leverage the Derivative Nature of the Market
On a final note, it’s important to understand that the derivative nature of the forex market offers a unique opportunity to investors.
More specifically, vehicles such as spread betting let traders speculate about the performance of a chosen pairing, meaning that they can hedge against specific currencies and profit even in a deprecating market.
This creates an opportunity to profit regardless of the prevailing market or macroeconomic conditions, while traders can also leverage volatility to generate significantly higher returns.
This requires knowledge and experience, of course, while it’s also wise to balance your portfolio with more risk averse assets such as gold and stocks.
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