To get good results in online trading you need commitment, perseverance but also a good basic knowledge of the market in which you want to work and the platforms you want to use. If you are attracted by the many ads of the platforms that allow everyone to make money easily, thinking that you can get rich with just a few clicks, you will always lose money.
This article aims to be an introductory guide for Forex trading and various online brokers that allow you to access the world of trading in a simple and reliable way.
From this short guide, which is suitable for beginner traders, you can come up with some useful tips to get you started in such a market. Although simple enough, it offers an initially difficult learning curve for all those who have just discovered it. After reading it, if you have additional interest in the world of online trading on Forex, we advise you to take a peek at IB’s AI trading guide, which will give you insight into how artificial intelligence can help beginner traders.
First, what is Forex?
Forex (or FX or Currency Market) is an acronym for Foreign Exchange Market, and it is a currency trading market, within which they can trade all possible currency pairs quickly and safely.
For example, if you have € 10,000, you can exchange them for the same amount in US dollars, which is determined by the exchange rate (the exchange rate is determined by the supply and demand of the currency). For example, at the time we are writing, the exchange rate between EUR (Euro) and USD (USD) is equal to 1.0595, so if you want to exchange € 10,000 in US Dollar, at the end of the operation you would get 10,595 US Dollars.
Forex is considered to be the largest trading market in the world and it circulates over $ 5 trillion daily! A huge personality, which makes it a very liquid market, where it is always possible to find a buyer to sell to.
But what are the benefits of Forex trading?
The exchange rate fluctuates over time and this means that the best benefits can be reaped from these currency exchanges.
Let me give you an example: In 2018, the EUR / USD exchange rate peaked at 1.5756, today it is equal to 1.0595. Now imagine exchanging 100,000 dollars in 2008 and exchanging it for euros today, you would earn about 50% of your capital, right?
Here is the calculation:
$560 * 0.84384 Euro = € 472.5504 (where is the current exchange rate between 0.84384 and Euro) So in the end you will have 148,000 euros in your hand (after investing 100,000 euros), right?
(Well, you have to remove the commissions too, but I can assure you that the commissions charged by Forex brokers are not as high as those of banks).
Now if you try to look at the historical exchange graph between the euro and the dollar, you will see that there have been many strong fluctuations over the years in which you could reap significant benefits.
Another benefit that should not be underestimated is the opening hours of Forex.
Suitable for those who want to work part-time or after the classic office hours this market is constantly open from Sunday evening to Friday evening!
How do I trade Forex?
To trade Forex, you should choose a reliable broker that allows you to work fast and without high commission (as the bank will do). You can find many solutions online, and the best that we can recommend are Plus 500, XM, and eToro.
For instance, eToro, in addition to being reliable, allows you to test their services through a free demo account, where you can practice using the platform with real exchange rates but with “virtual” money – without any risk and expense.
Signing up for these services is very easy and fast and their platforms can be used from both PC and Mac and usually also through iPad or smartphone.
Copy Trading vs. AI Trading
Additionally, eToro offers copy trading – an ability to copy moves of the more experienced traders. This is different from AI trading because here you are copying decisions of the supposedly best traders, while with AI trading you are letting a computer make decisions for you. Which one is better? It’s hard to tell at this point, and spreading your money across both would perhaps yield the best results. Just remember, losing money is always possible, and only invest the money that you are prepared to lose.