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How to Start Trading Forex Online?

by Louise W. Rice
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South Africa has a large community of Forex traders. Local residents buy and sell the largest volumes of currencies on the continent. They connect to the market remotely and work from any convenient device. Undeniably, Forex trading online is more accessible than ever. But where do newbies begin?

Fundamental Principles

Foreign exchange is a gigantic financial market. Somewhere in the world, currencies are being exchanged every second. This process is an organic component of international trade and tourism. In addition, institutions and individuals buy and sell currencies for profit.

Every day, over 6 trillion US dollars circulate between major banks, corporations, hedge funds and individuals in the colossal OTC market. It is entirely digital, as sellers and buyers connect online. Retail trading accounts for a fraction of the turnover. Still, the profit potential for individuals is huge.

Through selling and buying at the right time, they capitalize on the exchange rates. Every instrument is a pair in which a base currency is valued against a counter currency. For example, the rate of USD/ZAR is the price of 1 US dollar in South African rands. You buy low and sell high.

Since the 1970s, most currency rates in the world have been floating. Political and economic factors determine their dynamics. For example, when oil prices plunge, so do the currencies of exporting nations. On the other hand, higher interest rates set by central banks attract more capital and reinforce the respective local currencies.

Choose a Broker

A Forex broker is your intermediary. These companies provide access, tools, education, support, and financial processing. Not all of them are created equal. In South Africa, the industry is fairly regulated, so the scam is not uncommon. Traders must be extra careful when they search for a broker.

First, steer clear of unregulated firms. Responsible companies have nothing to hide, and they include full licensing details on their websites. Usually, you can find this information in the footer. Global brokers may be authorized by different monitoring organizations. For example, Forextime flaunts licenses from the local FSCA, the FCA in the United Kingdom and the CySEC in Cyprus.

Find out About Pricing

ECN and market maker are two models of brokerage. Electronic communication networks execute trades based on real-time data from the market. They charge a commission, so you know exactly how much each position costs. Market makers include costs into spreads — the difference between Ask and Bid. The rates slightly deviate from actual quotes, but there are no commissions.

Choose and Install Software

Generally, your choice of a platform will be prescribed by the broker. Every company offers one or two systems — desktop, mobile, or both. The most comprehensive terminals like MetaTrader 4 and MetaTrader 5 have three versions that may be used interchangeably. Use software for Windows and Mac, apps for tablets and smartphones, or web traders that work inside browsers.

Open a Demo Account

Trading is not rocket science, but it does have complexities. Do not expect to make gigantic profits from the get-go. This occupation has its specific learning curve, and every beginner must start with demo practice.

The demo is the first type of account you will open. It requires only basic contact details. The broker generates a login and password immediately, so you can enter them on the trading terminal. The system is unlocked as a simulator. It only imitates real trading conditions, and you have a virtual deposit to practice with.

Learn to navigate the platform and use all the necessary features. Build your analytical skills and explore risk management tools like Stop Loss. On average, beginners spend two-three months of training.

How to Learn

The retail dimension of Forex trading emerged in the 1990s. Since then, experts have created plenty of profitable strategies. However, the market is still risky, as its forces are beyond anyone’s control.

Beginners have a wealth of resources, from articles to books to YouTube channels. Video tutorials and guidance from the broker should help you find a suitable strategy. Apply theory to practice via the demo mode and build the necessary skill set.

Final Words

Forex is a popular way to make money online by monetizing knowledge. Anyone can learn the art of profitable trades, but you will only lose money if you are lazy. Begin your journey by registering a demo account with a licensed broker in South Africa.

Accumulate knowledge and develop your competence step-by-step. Take advantage of the available educational resources. Then, switch to a live account, fund it, and start trading in the real market. Good luck!

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