How to start trading?

Forex traders speculate on currency movements in the world’s largest financial market. Speculation isn’t gambling; the word ‘speculate’ comes from the Latin word speculare, which means ‘to observe’. Analyse the market first, and only make trades once you understand the prevailing market conditions and trends.

To get started, open a forex trading account.

Forex trading is done using currency pairs. You don’t just invest in a currency; you invest in the exchange rate of that currency against another currency. Here’s an example:

  • You decide to study yen exchange rates against the US dollar
  • The symbol for buying yen with US dollars is USDJPY
  • You decide to buy when the price reaches 109.29 yen to the dollar
  • You invest $1000 and get 109,290 yen
  • This only costs you $10 as you have 1:100 leverage on your account
  • You now have open position in USDJPY
Now you need to make a profit:
  • You decide to sell when the exchange rate reaches 109.17
  • It does and you sell – closing your USDJPY position
  • Your profit is 120 yen – or $1.10 after conversion to US dollars
  • You have made a 11% profit on your $10 investment

However, the exchange rate could have moved the other way, in which case you would have lost money. This is why it’s important to study the market before you invest; analysis increases your chances of making a profit.

We recommend you spend three to four months learning the forex market before you start trading significant amounts. You can do this with a demo account, but we suggest that you open a Cent Account once you’re familiar with the basic operation of our trading terminal.

With a Cent Account, you can make trades for as little as two cents, and you get the experience of trading with real money. This is important, as people behave differently when their own money is at stake; you’ll learn how you react under live trading conditions.

Here are some tips to follow when you’re starting out:
  • Select a broker with a good reputation – such as Forex4you
  • Analyse and understand the market conditions before you make a trade
  • Be disciplined – motivation and persistence are essential
  • Make sure you’re comfortable using your trading terminal
  • Don’t aim for big profits at first – focus on educating yourself
  • Accept any losses – you can learn from these as well
  • Don’t invest all your funds in one deal
  • Stay calm – don’t let your excitement overwhelm your common sense
Follow these principles, and take the first steps towards a profitable forex trading career!