In many ways, forex trading is ideal for beginners and aspiring investors, particularly when you consider its highly leveraged nature and the fact that you can control large positions with just a few hundred pounds.
However, the forex market is also inherently volatile, and while it’s possible to leverage volatility to your advantage in some instances, this is not something that inexperienced investors are likely to be comfortable with,
So, it’s important to take proactive steps when getting started in the market, and here are a few considerations to keep in mind.
- Research the Market and Your Individual Trades
Knowledge equates to power in the global forex market, so you’ll need to thoroughly research the niche and your chosen assets in detail before committing your hard-earned capital.
Even then, you’ll need to ensure that this knowledge is augmented with practical experience over time, as this can help to bridge the gap between theory and practice and lead to more informed decision making in the corporeal market.
Fortunately, you can use a demo account to familiarise yourself with trading platforms on Oanda and similar brokerage sites, while also honing your strategies in a simulated, real-time environment without being required to risk your capital.
This also allows you to define your trading strategy and research individual trades, as you look to cover every conceivable detail and optimise your chances of banking a profit.
- Only Commit What You Can Afford to Lose
There are a number of inextricable links between gambling and investment, although the latter does require a little more skill and strategy than most iGaming verticals.
One particularly universal rule that stands out is the one that stipulates you should only ever invest capital that you can afford to lose, as this guarantees you can sustain your efforts over an extended period of time.
In this respect, you’ll need to start by trading with spare money and disposable income, utilising leverage to increase the size of your positions in line with an underlying appetite for risk.
More specifically, don’t take on too much leverage (or debt) if you’re naturally risk-averse, as this can lead to seismic losses that you may be unable to cover.
- Start Small and Scale Your Efforts Over Time
On a final note, it’s really important to start small and manage your expectations as a new or inexperienced trader.
For example, we’d recommend starting out by trading one or two major currencies through your chosen forex platform, focusing on highly liquid and popular options such as the EUR/USD (which accounts for more than 24% of total daily trading volumes on average).
You can then start to scale your efforts organically in line with experience and profitability, by branching out into selected major currency pairs and even considering more volatile exotic alternatives.
Over time, you can also move into other markets, from stocks and indices trading to commodities.
