If you are a novice and find yourself intimidated by the complexity and vastness of forex trading, worry not. Almost more than 7 trillion USD are traded across the market by various participants making it one of the best spaces to earn a profit. However, forex trading also comes with its risks. As a beginner, you can chart a course to improve your forex trading skills and develop the rationale needed to execute successful trades. You can also learn how to navigate the market’s pitfalls and hedge your risks. In this guide, we will take you through the tips and tricks that will help you trade in foreign exchange like a pro.
What is Forex Trading?
Forex is an abbreviated form of the words ‘foreign exchange trading’. Forex trading, as the name suggests, allows you to buy and sell currencies on the global market. Most traders are more familiar with stock trading, a practice that involves buying and selling shares of different companies. However, forex trading is slightly different. Here, the units of trade are the currencies of different countries. When you engage in forex trading, you essentially trade one currency in exchange for another. So, the transactions comprise currency pairs, like the EUR/USD, where the former is traded against the latter. The values of the currencies change based on interest rates, economic data, and geopolitical events.
One of the primary draws of forex trading is to leverage price movements to make money. Forex traders try to buy at low prices and sell high or vice versa to earn a profit. Similarly, businesses also rely on forex trading to protect themselves against unfavorable currency shifts and uncertainty, also known as hedging. However, forex trading also comes with risks- a global market size can cause prices to change quickly. Here are a few tips that will allow help any forex trading beginner to start out strong:
Tip to Help You Get Started with Forex Trading in the UAE
Selecting a forex broker in the UAE
Before you do anything else, you have to find the right broker to begin your forex trading journey on the right note. To make sure you are in the right hands, try to look for the best forex brokers in the UAE and retain their services. A helpful tip is to find forex brokers that are regulated by reputable financial authorities and are subject to stringent rules and compliance. Some of the best forex brokers in Dubai also offer services that make every trade more seamless, including user-friendly online platforms, educational resources, and effective management. Also, make sure to check what kind of currency pairs a forex broker is offering and inquire regarding fees and charges to make a selection that aligns with your goals.
Open the right accounts
Once you have found the right forex trading broker, you need to open a trading account. Trading accounts allow you to access foreign exchange markets and trade currencies swiftly, reacting to market changes and opportunities to earn a profit. Today, various trading accounts also enable you to use advanced trading tools like analysis software, risk management features, and options for diversification. If you approach a top forex broker in the UAE, you can even choose from a range of trading accounts depending on your experience level and initial investment.
Brush up on the basics
Getting better at forex trading is just like learning any other skill-understanding the basics can take you a long way. First, familiarise yourself with the different kinds of forex markets and the functions they serve. From futures and options markets to spot markets and forward markets, each forex market is distinct and works according to its own set of rules. You can also brush up common forex trading terminology to ensure you don’t misunderstand data while executing a trade. Getting a grasp of concepts like pips, spreads, leverage, and margin can help you get started with more confidence. Once you have the basics locked, you can move onto learning about slightly more complex ideas like market mechanics and dynamics that affect currency prices.
Develop a Trading Plan
The next step is to create a well-thought-out trading plan to help you carry out successful forex transactions. The first criteria to consider before making a trading plan are your ultimate financial goals. Do you want to try your hand at forex trading to build a nest egg for the future? Is your aim to grow your wealth by earning high-ticket profits? What kind of margin can you work with considering your current financial standing? Asking such questions will allow you to chart your financial aims and the path to achieving them via forex trading. It is equally important to factor in your risk appetite and tolerance to execute trades accordingly. Lastly, you can settle on trading strategies that seem like they would align with your goals and match your risk tolerance. Once you have a plan in place, you can ensure you stick to it even when your emotions run high.
Choose Currency
As mentioned above, forex trading involves exchanging foreign currencies and the transactions comprise pairs. Keeping that in mind, you have to be careful while choosing the currency pairs you want to trade with. As a beginner, it is best to play it safe and choose major currency pairs like EUR/USD or GBP/USD. These pairs are relatively more liquid, which means that they are easier to buy and sell quickly. Completing transactions with major currencies can take less time and leave you feeling more confident about future trades. In the beginning, you can also try to limit your currency options to prevent feeling overwhelmed. However, once you get your feet wet and feel ready, you can begin branching out and experimenting with the currencies you choose.
Analysis and Monitoring
After you gain a little experience, you can also begin to learn more about technical and fundamental analysis. The former uses charts and indicators to gauge price movements while the latter is concerned with economic factors and current affairs that can affect currency values. Ideally, it is best to harness the power of both kinds of analysis to get a complete picture of what the market looks like. Similarly, you can also begin monitoring your trades once they go live. Keeping an eye on your trades allows you to make adjustments and adapt your strategy if required.
At Orient Finance, we offer a wide range of 60+ currency pairs for you to choose from. Our experienced and expert team offers non-stop support to help you execute trades swiftly. Our razor-thin spreads and round-the-clock trading window has made us UAE’s best online trading platform.