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Tips when starting with forex trading

As a beginner when it comes to forex trading, you first need to choose a broker that you can trust. This means that they should be well established, so don’t rely on the page your friend has started, nor does it hurt that they offer forex trading (of course!). We understand that it can be difficult to know which brokers are reliable and good, therefore we like to use a site called ForextradingAU to find the best forex brokers in Australia. On this page, there are experts who compare different traders so that you can focus on the fun, namely the trade itself. If you continue reading, we write about some more tips that you should consider when you step into the exciting forex world.

Get an Account:

It’s good if you choose to get an account with at least one trusted trader. When you have an account it’s to your benefit to take advantage of their services, such as their demo accounts so that you get to know the platform before investing your money.

Time:

Don’t start with forex trading if there is a lot happening in your life. Wait however long you need instead, Forex trading will not disappear within the next few years. Don’t be afraid to go to a library to gather information either, it will take a bit longer but the environment and the information in the literature may be worth it.

Choosing your strategy:

If you spend enough time gathering information and have played around with demo accounts, you will notice a strategy that works for you. Therefore, do not start with “Copy trading” because you find it simple, as other traders can choose strategies that you do not agree with, or at worst, makes you lose money. Also, do not forget to use the demo accounts every time you try a new strategy.

Is it too good to be true?

Too good to be true is a common expression, with good reason. But it is not something that you want to say about the company that you intend to use for forex trading. The banks will not be a good option either as you will need to pay an exchange rate. Using a bank would also take far too long for those who want to trade in the fast-paced world that is forex trading. That’s why most people choose to go to a so-called FX broker with their trading needs. If you want to have the opportunity to make money from currency trading then this is almost a must. But how do you know your money will be safe with your choice of FX broker?

Unfortunately, there is no secure way to answer that question. It is not like it says “SCAM” on the page if you go into an unreliable FX broker’s website. But there are methods that you can use to reduce the risk. Below you have a list that can help you along the way.

Here are some tests for your FX broker – Can they pass them?
  • 1

The most common thing people do when they want to find the reliability of a product or service is to search the name, sometimes even write scam after the name. There is no difference when you are pondering over an FX broker. If it is unreliable then you will be bombarded with results on the first page of the search engine you have chosen (a.k.a Google). Another common method is to search for reviews, the same principle as last time, but write a review instead of scam. Then you will get many pages that have done the investigating for you, you can even get tips from them on other brokers who may offer better benefits to you as a potential customer.

  • 2

Another method you can use is to see if your broker of interest only deals with FX, or if they also allow stock trading. If they allow both and then they are a much more reliable broker since stock trading is a more regulated market. This does not mean that anyone who only offers FX trading tries to trick you, just that you should be more careful.

  • 3

The last tip we have to offer is to check if the FX broker is regulated by ASIC, also known as the Australian Securities and Investments Commission. ASIC is one of the oldest regulators on the market and the FX brokers that are regulated by them are regarded as among the best. If they are regulated by ASIC then it would be very unlikely that they are not reliable. You will surely find out if the broker is regulated by ASIC or not by reading a review.

This list is to help those who just start with forex trading, which is why the tips can seem simple and obvious. But it can also help show that it is easier than many think to find a reliable FX-broker. Then it is up to the individual to find which broker is best for them, but the person does not have to worry that someone will steal their money.

How does currency trading work?

When you are buying currency pairs, you are buying a currency while selling another. We start with a simple example to describe how currency trading works: USD / AUD is one of the most commonly traded currency pairs in Australia. USD is the US dollar denomination and AUD is the Australian dollar denomination. In this currency pair, the USD is referred to as the base currency and AUD is referred to as the counter currency. In this example, it means that you believe that the US dollar will be strengthened against the Australian dollar.

The correlation is nevertheless seen as a single unit even though it refers to two separate currencies. In other words, you trade the USD / AUD pair and not the USD or AUD.

We take one clear example to further clarify this by adding some numbers. Assuming USD / AUD is trading at 1.39300988, it means that every $ 1 = 1.39 AUD. In other words, the US dollar is stronger than the Australian dollar, or vice versa, you need more AUD to buy USD.

Currency trading opening hours

One of the major benefits of currency trading is its high availability. If you invest on the Australia Securities Exchange then you probably already know that it is open from 10 am to 4 pm on weekdays and closed on Saturdays and Sundays. Trading in currencies, on the other hand, is in principle always open, or at least during everyday life.