If you are interested in the prospect of earning on Forex, read many articles on the Internet and decided to try your own strength, then you should first choose a brokerage company and register as a client. No, this is not a mistake! If you thought that you need to start by reading thematic literature and articles, then this is not so. You will be very bored to read literature without combining it with practice. You need to study trading in the foreign exchange market directly on the price movement charts. Read how to choose a reliable broker. Read and practice – this is the only way to learn how to trade.
How it works. It provides for earnings from fluctuations in the rates of various assets. You can earn on CFD (contract for the difference in prices) for the currency, commodity-commodity assets, stocks, and indices. Recently, most brokers have added cryptocurrency.
Separately, I focus on two points:
- Swap This is a kind of fee for transferring the position the next day. Without going deep into the details, the swap is tied to the discount and interest rates of other countries. There is a situation where, due to their change, the trader instead of paying interest, on the contrary, earns on a swap (the so-called positive swap). This strategy is called Carrie Trade.
- Rebate. It’s rather not a trader’s earnings, but compensation for his costs, but it’s worth recalling this possibility. It is a partial return to the trader of the spread regardless of the effectiveness of the transaction. Compensation can be provided by both the broker and a third-party independent service. For a broker, a rebate is a marketing move aimed at attracting traders, increasing their trading turnover or increasing interest in individual assets.
From theory to practice. The essence of trade is to buy cheaper and sell more expensive and vice versa. For this, the trader has several tools: fundamental, technical analysis and the trading platform in which transactions are carried out. A trader can open long positions (to buy an asset in order to sell it later) and short ones (to sell an asset so that he can later buy it cheaper and close a debt position). The provider of transactions is a broker who holds his commission (spread). Counterparties for transactions are other private traders, institutional investors, investment banks, etc.
Trading begins with registration (opening a trading account) and verification. Confirmation of identity means sending passport data, a scan of documents confirming the place of residence (registration) and entering detailed information about yourself. Verification is not always a mandatory process. But I am of the opinion that when I open a bank account I never do this anonymously, and my money will be saved when I can prove that it is mine. Why? Our editor of the blog of traders very easily described the essence of the verification in the article ” Forex Security “.
The next step is testing the capabilities of the broker and gaining experience by opening the first deals on a demo account. The demo account allows you to:
- Understand the functionality of the platform and choose the most convenient trading mode for yourself.
- Get acquainted with the capabilities of indicators, test advisors, develop your own strategy. In a word, take the first steps, earn the first, albeit virtual, money and learn how to feel the market.
And finally, the decisive step is to open a real account, replenish the deposit and start trading. The capabilities of your personal account allow you to:
- Open any number of transactions for the purchase or sale of any asset from the Liteforex arsenal, including cryptocurrencies, in a few clicks. Track the movement of the course and analyze its change in past periods.
- Copy trades of successful professional traders in automatic mode. In the “Social Trading” service, an investor can get acquainted with the rating of traders, trade statistics, risks, connecting the account to someone who is interested (more about the service below).
For those who want to learn more about the capabilities of their personal account and start trading. Here, the functionality of each menu is described in detail and practical examples of working with it are given.
Pros. The arsenal of the broker’s tools reaches up to 200 or more tools. Compared to the exchange, there are many more opportunities to diversify risks and implement the craziest strategies. To some extent, Forex combines all the advantages of stock, foreign exchange, and commodity markets.
- You need to own a large knowledge base on fundamental, technical analysis and be able to apply it. You need to be able to build a trading system, to be able to analyze the trading history. You need to be able to control yourself and be disciplined. It can take months to study because not everyone succeeds. According to statistics, only 5% of people remain in trading, the remaining 95% lose their deposit and leave the market.
High risks. Forex is an unregulated market, despite the presence of “regulators”. The lack of transparency of brokers and the principle of their work is a stumbling block for potential traders.