Baby steps … what is Forex trading?
Forex or FX is an online marketplace for trading currencies against one another. This market therefore provides opportunities to speculate on price movements which when accurately predicted can lead to profits.
Speculating on forex is a risky game, as many as 80 per cent of traders lose money*. For this reason you should never bid more than you can afford to lose, and it is wise to ensure you fully understand the markets and systems before you begin risking your money.
Shrewd investors work hard to find the best brokers to fit their own requirements, and ensure these brokers have the right platform for their needs.
Which platform should I choose?
When researching trading platforms, you need to check which brokers offer the platforms and that this broker is regulated by the Financial Conduct Authority (FCA). Choosing a broker with FCA regulation ensures the broker is permitted to offer their services to traders in the UK and is compliant with the high regulatory standards required of companies offering financial services in the UK.
To ensure you are on the right path, Compare Forex Brokers provides a useful comparison to help you find the right brokers and platforms. Here you can find some of the best platforms available with brokers that have FCA regulation and learn about the key features.
Compare Forex Brokers’s considers MetaTrader 4, MetaTrader 5, and cTrader among the best trading platforms you can choose and breaks down the features each broker offers. The website’s ranking system is based on spreads, commissions, and customer service each provides, together with a degree of reader feedback.
You will want to check out which platform has the best trading speeds, crucial for getting the price the broker quotes and for social trading and automated trading.
What is automation?
Automated trading is when you utilise computer programmes to automate the process of buying and selling your trades. In simplistic terms, you use your own judgement, together with some preset rules you’ve set up, and then let the software run your trades. For example, you might set a cash limit on how much you are prepared to pay when buying, then a minimum profit you are happy to reach before the programme automatically sells on.
Do remember, however, that just because you hope to see a profit, and set your parameters to fit your ambitions, the market can move against you and your investment may result in losses.
Will it cost me money to trade?
Any amount you invest in shares, currency or commodities is at risk from the second you commit to your purchase. Everyone hopes to make a profit, but that’s unlikely for the vast majority of traders, so you should only spend what you can afford to lose. Set strict limits on your usage, as it is all too easy to be caught up in a world of virtual trading where the spend doesn’t seem real because it very definitely is.
It’s not the only cost of the investment itself, of course. Using a brokerage will likely cost you money in fees and commissions, and some sites which claim to offer free services will have limits which might not suit the kind of trading you want to take part in.
Be sure to investigate and compare very carefully which each broker and platform offers, to make sure you are choosing the one that is fit for your needs.
*Before investing in the stockmarket or currency trading it is recommended you take independent financial advice. Be aware the values can go down as well as up, and a profit is not guaranteed.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.