Many people in the UK are now looking at new ways to make money beyond traditional employment. Whether it is to achieve a better work/life balance or forge a new career, it could be something that you are also considering. Trading on the world’s Foreign Exchange (or Forex) market has become a popular choice with UK residents.
When you consider it turns over around $5 trillion each day and offers many opportunities to make money in various currency pairs, it is clear to see why.
However, as with any investment activity, it is crucial to know what you are doing before diving in. This will avoid you making expensive mistakes and losing your starting capital. But what should you know as a novice Forex trader?
Get the Basics down First
When trading Forex for a living, you will be risking your own money on each trade in order to make more. If you hit more winning trades than losing ones, you end up with a nice profit to look back on at the end of the year. Sounds simple right? Unfortunately, it’s not quite so easy which is why you need to get the basics down first.
The FX market operates 24 hours a day, 5 days a week on a global scale. It sees traders place money into currency pairs and predict whether the price of the pair will rise or fall.
To help make the right predictions, traders will analyse trading charts via online brokers to spot opportunities. They will also take into account general economic news around a currency and anything else which may affect its price. Common currency pairs include GBP/USD, GBP/EUR and USD/JPY.
Choose Your Broker Wisely
To trade Forex, you first need to sign up with an online FX broker. These platforms not only give you the means to place trades on the market but also help manage your portfolio and give you access to the trading charts. It is key to choose your broker carefully and pick one that is reliable and honest. Just as you may look at this TorFX review when picking a money transfer provider, you should read reviews of any FX broker you plan to trade with.
Make a Plan
Another good tip for any beginner to Forex trading is to write out a plan. Using this plan every time you sit down to trade will help you spot opportunities and focus on what you should be looking for. It will also help avoid you making emotional trading decisions or taking on trades you should not be interested in.
A good plan will include details like what currency pairs you will trade, how much money you will risk per trade and how you will find opportunities to trade.
Take It Slow to Begin with
In the same way as you would start off slowly in anything new, it is wise to take your time as a new FX trader. Although the basic premise of how the market works is simple, it is not so easy to make consistent profits in it over time. This can be done but it first requires you to put in the hard work and graft to gain the skills needed.