The global foreign exchange market is one of the most popular markets because people, businesses and even countries can all take part in the forex market. Another drawcard for many traders is that forex can be traded with a small initial investment, as well as the fact that it operates 24 hours a day, five days a week, unlike many other instruments. 2020 was one of the most unpredictable years in market history, creating volatility that was second to none. This high volatility was experienced largely in the forex market thanks to the economic impacts of Covid-19 on each country, which had various impacts on the value of their currencies. If you’re planning on forex trading with iFOREX this year, here are 5 important tips to bear in mind.
- Finding a reliable broker
First things first, finding a broker that you can trust and feel secure with is a must, and this starts with a review of reliable broker platforms. A quick search for brokers online will result in a long list, and some of these may not be reliable. The best way to find a broker who you can trust is to do a review of reliable broker platforms online. Once you’ve done this, you can check which brokers are regulated. A regulated broker is authorised and regulated by an authoritative body, which provides a kind of insurance that allows you to feel secure in the knowledge that should something go awry, your best interests will be looked after.
- Choosing a forex trading pair
When trading forex in the markets, you’ll notice that the instrument of choice is a currency pair. These exist in order for currencies to be measured against each other, to show the value of one currency compared to another. Each forex pair has a price, which refers to how much of the second currency would be required to buy one unit of the first. For example, one of the most popular currency trading pairs is the EUR/USD, which shows how many US Dollars you’d need to buy a euro. Choosing a forex pair depends on the currencies which you’re most interested in and know the most about. The euro and the US dollar are very common currencies to trade and are easy to research and find information on, hence the popularity of the EUR/USD instrument. It’s also a good idea to choose a currency that you can keep tabs on easily, as you’ll need to be up to date on that currency’s influencing factors such as interest rates, economic conditions, and inflation. Those who participate in forex trading with iFOREX or other reliable brokers are able to choose from a host of forex trading pairs including EUR/USD, GBP/EUR, JPY/USD and many more.
- Keeping up to date
With the world in a current state of instability during the pandemic, global economies are constantly changing, so it’s important for forex traders to keep up to date on the latest world events in order to gauge their impact on each currency. Factors that can influence currencies include inflation, interest rates, geo-politics, as well as a number of aspects that can impact the economy. Keeping tabs on these factors is important, as they could be an indicator as to the value of a currency, and therefore the price movements of the currency in the financial markets.
- Avoiding analysis paralysis
Most traders create some sort of trading plan which they use to map out their trading journey. This can include strategies like technical analysis, which looks at past data and trends of a currency trading pair in order to anticipate future trends and price movements. It can also include fundamental analysis, which uses external factors that influence currencies to identify potential opportunities in price changes upwards or downwards. Many traders use a combination of both technical analysis and fundamental analysis to create a well-rounded overview of what could happen with currency prices. The trick is not to over analyse to the point of confusion. Simplify your analysis, and make sure that you use the most salient points and only factor in necessary data. Focus on the most important points and use those to formulate your strategy. Whether you use technical analysis or fundamental analysis or both, it’s a good idea to have some sort of plan for your forex trading to help keep track of your funds and make sure that you are staying on the path towards your goals. One last thing—past performance of an instrument is never indicative of future performance, so while both technical and fundamental analysis can help you gain insight on your chosen instrument, neither guarantee any sort of result.
- Knowledge is power
Knowledge is one of the key factors involved in online trading, and this includes the latest world events, as well as how the markets work in general. Forex trading requires an understanding of what affects currencies and how this translates into the markets. Therefore, expanding your knowledge on all things to do with forex can only help you on your journey. You can do this either by doing an online trading course through an institution or finding a broker that offers educational resources. iFOREX is a good example of a broker that focuses on education and knowledge expansion for each trader. Those who would like to begin forex trading with iFOREX, as well as over 900 other CFD instruments, can enjoy a variety of educational resources ranging from video tutorials to PDF guides and more. One of the most valuable resources on offer is one-on-one training, which is tailored to your specific trading needs and allows you to spend time with a trading coach and learn at your own pace. iFOREX aims to enhance your trading journey one step at a time with a keen focus on their clients and by providing the knowledge and tools that traders need.
|iFOREX UK is a trading name of VIBHS Financial Limited, authorised and regulated in the UK by the Financial Conduct Authority under Firm Reference Number 613381. Incorporated as a Limited Company in England and Wales under Companies House number 08279988.|
|The iFOREX team have co-operated in producing the materials in the document, which should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 57.83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please note: Calculations of past performance movements may represent the futures and not the underlying asset. Full disclaimer: https://www.iforex.co.uk/legal/article-disclaimer|