Thinking of forex trading? Tips to get you started

Forex trading is gaining traction in Kenya as more Kenyans are getting interested in making money through it.

1. Educate yourself

You should take forex trading as a course, just like any other financial course. This gives you the skills that you need to navigate the choppy waters of forex trading. Even people who have been trading for years often take the course in order to acquire specific skills that they have not picked up in their years of trading, and they find that it makes a huge difference when they resume. In addition, when training there is a software provided by an international brokerage firm known as XM that provides a platform known as MT4 where you are able to wire your money through local banks and the money reflects in US dollars, pounds and other major currencies.

2. Start small

You need a minimum of Sh1,000 to trade, but a comfortable minimum to trade with while learning the ropes is Sh10,000. That will allow you to possibly make profit depending on how the market fluctuates. You can make even Sh3,000 per day with that. Forex trading has a learning curve, and with a low amount, the mistakes that you make will not be too costly, allowing you to learn from them instead of getting knocked down by them. Give yourself time to get a grasp of how the market works.

3. Be in the right frame of mind

This is trading psychology. You have to be careful, so that anxiety and greed does not make you lose money. Trade with the minimum given so that you do not lose money. Many factors affect how much money you will gain, so you have to manage to expect anything. Greed may make you ignore or overlook those factors. Outline what position you are at. If you are anxious, hoping to get a lot of money and then you end up not getting it, you may trigger yourself into making further losses through more mistakes, and you might not bear those losses. Check your emotional undertones. If you are not in the mood to trade, keep off the platform until you are sober.

4. Know when to trade

Some days are good for trading, while some may not be appropriate at all. The markets are usually dormant on weekends, for example, and over holidays. You need to be able to predict such changing tides.

5. Do not make it your main source of income

You can earn a living from forex trading alone, but it takes a while to get there. The best way to get into it is slowly, while doing other things on the side, like being a student or working, in another industry. While starting, take a short course that takes approximately three months. You can work, trade and learn all at the same time.

6. Be able to read trends

Read and understand global news so that you can manage to read and understand the market. Strategies on trading keep changing depending on how the market is, so you must have current affairs at your fingertips. Trade when the market is right. Do not do it haphazardly, knowing when to enter and exit the market is crucial

7. Increase your investment with time

In order to make really good money in forex, you also have to invest in it. It works just like any other market, where the more you invest, the higher the risk but also, the higher the returns. Do not use very higher volumes in order to try to make more money faster. For example, do not try to make Sh20,000 from Sh10,000 in a day. It is better to gain Sh 2,000 per day than lose it all to greed.

8. Commit to it

The biggest mistake people make is that they borrow money to trade and they are supposed to pay it back, say by the end of the month. Some of these people wait until the last week to trade, only to realise that they do not have enough time to make money, and even make losses. If you do not follow the due process, that is exactly what will happen, and your creditors will be on your case.

9. Have patience and persistence

The market runs for 24 hours on weekdays, but sometimes when you follow the news you will realise that the market will be good at 3 am. Can you wake up at 3 am, get into the market and execute the trade? Are you the kind of person who will be told that only Monday will be good for trading, or that you have to wait over the holidays and trade in January when the biggest market movers like banks are active again and be comfortable with waiting? That is the kind of person who is likely to succeed in forex trading.

What is Online Forex Trading

What is Forex Trading?

Here you’ll find forex explained in simple terms. If you’re new to forex trading, we’ll take you through the basics of forex pricing and placing your first forex trades.

‘Forex’ is short for foreign exchange, also known as FX or the currency market. It is the world’s largest form of exchange, trading around $4 trillion every day, and it is open to major institutions and individual investors alike.

Forex trading explained

The aim of forex trading is simple. Just like any other form of speculation, you want to buy a currency at one price and sell it at higher price (or sell a currency at one price and buy it at a lower price) in order to make a profit.

Some confusion can arise as the price of one currency is always, of course, determined in another currency. For instance, the price of one British pound could be measured as, say, two US dollars, if the exchange rate between GBP and USD is 2 exactly.

In forex trading terms this value for the British pound would be represented as a price of 2.0000 for the forex pair GBP/USD. Currencies are grouped into pairs to show the exchange rate between the two currencies; in other words, the price of the first currency in the second currency.

Some commonly traded forex pairs (known as ‘major’ pairs) are EUR/USD, USD/JPY and EUR/GBP, but it is also possible to trade many minor currencies (also known as ‘exotics’) such as the Mexican peso (MXN), the Polish zloty (PLN) or the Norwegian krone (NOK). As these currencies are not so frequently traded the market is less liquid and so the trading spread may be wider.

Forex trading spread

Like any other trading price, the spread for a forex pair consists of a bid price at which you can sell (the lower end of the spread) and an offer price at which you can buy (the higher end of the spread). It is important to note, however, for each forex pair, which way round you are trading.

When buying, the spread always reflects the price for buying the first currency of the forex pair with the second. So an offer price of 1.3000 for EUR/USD means that it will cost you $1.30 to buy €1. You would buy if you think that the price of the euro against the dollar is going to rise, that is, if you think you will later be able to sell your €1 for more than $1.30.

When selling, the spread gives you the price for selling the first currency for the second. So a bid price of 1.3000 for EUR/USD means that you can sell €1 for $1.30. You would sell if you think that the price of the euro is going to fall against the dollar, so you can buy back your €1 for less than the $1.30 you originally paid for it.

Calculating your profit

Take another example. Suppose the spread for EUR/GBP is 0.8414-0.8415. If you think the price of the euro is going to rise against the pound you would buy euros at the offer price of 0.8415 per euro. Say in this case you buy €10,000 at a cost to you of £8415.

The spread for EUR/GBP rises to 0.8532-0.8533 and you decide to sell your euros back into pounds at the bid price of 0.8532. The €10,000 you previously bought is now therefore sold for £8532. Your profit on this transaction is £8532 minus the original cost of buying the euros (£8415) which is £117. Note that your profit is always determined in the second currency of the forex pair.

Alternatively, suppose in the first instance you think the price of the euro is going to fall, and you decide to sell €10,000 at the original bid price of 0.8414, for £8414.

In this case you are right and the spread for EUR/GBP falls to 0.8312-0.8313. You decide to buy back your €10,000 at the offer price of 0.8313, a cost of £8313. The cost of buying back the euros is £111 less than you originally sold the euros for, so this is your profit on the transaction. Again your profit is determined in the second currency of the forex pair.

Spread betting or CFD trading

XM provides two different vehicles for trading forex: spread betting and CFDs. Both of these products allow you to speculate on the movements of currency markets without making a physical trade, but they operate in slightly different ways.

With spread betting you stake a certain amount (in your account currency) per pip movement in the price of the forex pair. So for instance you might buy (or sell) £10 per pip on USD/JPY, to make £10 for every pip the US dollar rises (or falls) against the Japanese yen. Forex traders have been using spread betting to capitalise on short-term movements for many years now. Find out more about spread betting.

With CFDs you buy or sell contracts representing a given size of trade. So you might decide to buy 1 contract of GBP/USD, which (with InterTrader) represents a trade of £10,000. Your profit or loss is calculated in the second currency, in this case US dollars, and then converted (if necessary) into your account currency. Alternatively you can open account using the link below

https://clicks.pipaffiliates.com/c?c=56401&l=https://clicks.pipaffiliates.com/c?c=56401&l=en&p=0&p=0best forex broker

Either way you don’t have to provide the full currency value to open your position. Instead you put down a margin deposit, which is a fraction of the full value. And you don’t actually buy or sell any currency: you are opening a speculative position on the change in value of the forex pair. Your profit or loss is realised when you close your position by selling or buying.

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The editor will endeavour to create a new page and post building experience that makes writing rich posts effortless, and has “blocks” to make it easy what today might take shortcodes, custom HTML, or “mystery meat” embed discovery.

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