If you are looking for a way to make a few extra dollars, look no further than the currency markets. The currency markets were once only traded by big money centre institutions and banks. Over the past few years more and more retail brokers have started to cater to the retail investor. The currency market is the largest traded financial market, with over four billion dollars changing hands each day. This provides the liquidity that all investors and traders need to be profitable. The more liquid an asset the easier it is to buy and sell it, this is especially true with currencies.
The first step a new trader has to take is research the forex brokers available to the retail investor. Doing your research online will provide many sites where other traders have reviews of the many brokers available. This will give you an idea of how much money you will need to deposit, and if the broker charges a commission or just makes money from the spread. A major plus to trading forex is the low initial payment that most brokers will allow you to trade with. Most brokers allow the trader to open an account with as little as $25.00. Opening an account will also let you have access to the demo practice accounts that all reputable brokers will provide.
When you first start out trading and have had no prior trading experience, it is advisable to start on the demo account for a few months. This will allow you enough time to get a feel for how the markets move. You can then also decide on what currency pairs you would prefer to trade in. The most liquid currency pairs revolve around the most economically developed nations. It is safest to trade these currencies including: U.S. Dollar, Euro, Japanese Yen, British Pound, and Canadian Dollar. Practicing to trade these currency pairs on your demo account will let you learn from experience. If you make mistakes the money is not real so there will be no loss to your live money account.
Foreign exchange brokers will also offer many online video classes. The videos that the account holder can download, and watch at anytime, provide valuable information about the forex market. The videos will range from an online forex course directed towards the beginner, to advanced techniques in trading the currency markets for traders who have been trading for some time. Market professionals have put together these videos for your own benefit. Brokers want you to be profitable, so that you trade more and give them business. Watching them will only help you to develop good trading habits that will make you profitable.
Once you have practiced on the demo account enough to show profitability, try moving to real money. Only you as a trader can decide if you are ready or not to move on to the next level. Trading with real money is different than your practice account. The key is to keep the same frame of mind that you had when trading your practice account. The same strategies that were used in the demo account should be used for real money. If the strategies work, they work, there is no need to change it up. Just be smart and keep the size of your investment low at first. Currency brokers will allow you to borrow substantial amount of money, make sure you feel comfortable with the amount you are trading with. Starting out trading the smallest lot size allowed is the best way to go. If you begin to show consistent profit then think about putting more money into a position.