The forex market can be an intimidating space for many novice traders, mostly due to some of the unrealistic expectations some beginners have. It should be known that forex trading isn’t any “get rich quick scheme”. It requires a lot of experience, technical know-how, and skill to consistently execute successful trades.
That being said, its relatively easy to get started in the forex market, if one follows some basic guidelines and steps. This article aims to present a beginner’s guide to the world of forex trading.
Step 1: Understanding the Lingo
Having a firm understanding and knowledge about the terms used during forex trading can make a beginner’s entry to the market, much simpler. Some of these words are explained in brief below.
- Quote currency: The currency the trader’s going to purchase
- Base currency: The currency that the trader is holding. For instance, the base currency of a US-based trader would be the U.S. Dollar.
- Bid price: The price at which the broker is willing to buy or bid the trader’s base currency.
- Ask price: The price at which the broker asks, in exchange for buying the quote currency of the trader’s choice. The Bid price is always less than the ask price
- Pip: Refers to the smallest measurable value of currency movement, where “pip” stands for percentage in point”. A single pip is equal to 1/100 of 1% of the trader’s currency. For instance, when the value of the USD increases by $0.0001, it rises by a single pip.
Step 2: Selecting the right broker
The next step involves selecting the right brokerage firm to trade with and the options are many. The brokerage firm will be responsible for making the trader make and execute the trades, as well as a number of other financial services. Traders should always look for reputed brokerage firms, with legitimate licenses and a wide variety of trading instruments to offer. IQ Option is one such brokerage service that meets all the criteria.
Step 3: Analysing World Economy
Then the forex market is heavily influenced by many geopolitical factors that traders should take into account. Keeping track of the political climate, the GDP growth rate, and any news that might affect the currency that the trader is interested in, should give the trader enough leads to select which quote currency to invests in. Traders should also keep a lookout for economies which have great growth potential.
Step 4: Making the First Trade
Once the trader has decided which quote currency he/she is going to buy, they can start executing their first trade by placing their first order. This can vary from broker to broker, and depends on which platform the trader has selected.
Using IQ Option to Enter into Forex
As mentioned before, IQ Option is a well-known brokerage offering several asset classes and tradable assets to traders worldwide including forex. With more than 25 million registered traders worldwide, it is arguably one of the well-known online brokerage platforms currently operating.
IQ Option – popular for being the broker for beginners recognizes the obstacles that beginner traders might face while starting out, especially the forex market. Apart from providing various educational resources, IQ Option also offers a tradable demo account. Beginner traders can use this demo account equipped with virtual money, and test it on real-time trading environments. This can be a perfect tool for beginners to sharpen up their skills, once they grasp the basics.
IQ Option has a one-click trade execution system with a minimum amount requirement of $1. The minimum deposit is as low as $10, allowing many small scale traders to start trading on their platform. Currently, the platform offers a total of 121 currency pairs to choose from, with all the major currency pairs such as USD/EUR, EUR/GBP, etc included.
The Forex market can be a world of opportunity for traders to earn huge profits, only if they grasp the concept and follow some basic guidelines.