What Is Forex Trading?
The so-called Forex or foreign exchange market is a network composed of both buyers and sellers who transfer currencies among themselves at a pre-agreed price. In this regard, FX trading is a procedure in which individuals as well as companies or central banks exchange a certain currency for another currency. That is, anyone who has ever vacationed outside the currency union has become a Forex trader. And before the introduction of the euro, every time you took a vacation abroad, you were a Forex trader.
While some forex trading for beginners foreign exchange is used for practical purposes, the majority of all currency conversions are done to make a profit. The amount of money that is converted or circulated day by day plays a decisive role in the price development of many a currency. The volatility, i.e. the price movements, is absolutely attractive for the Forex trader. Because on the one hand, you can book high profits in the course of Forex trading, but you have to keep in mind that losses can also occur. FX trading may be promising, but quite dangerous. Especially if you are not interested in FX trading in advance. One should not think that every Forex trade opened would bring a profit.
If one is concerned with FX trading, it is important that one deals with the three forex market segments:
Here, Forex trading is about the physical exchange between currencies. The exchange occurs at a specific time after the Forex trade has been executed. “On the Spot” stands for “immediately”, i.e. within a period shortly thereafter.
Whoever is active in the so-called forward foreign exchange market, buys or sells a certain currency at a price determined in advance. However, on the best forex trading platform contracts can be concluded at a specific time or within a specified period in the future. Here there is no obligation to execute – that is, forwards are not legally binding. Therefore, those who would incur a “loss” are better advised to let the “deal go bust”.
All those who are interested in Forex on trading platforms for beginners or on the futures foreign exchange market, buy or sell a certain currency at a certain price, but at a time in the future. Forwards are not legally binding – but futures are. It is important to keep this in mind when trading FX so that there are no unpleasant surprises.
In the end, Forex traders choose to speculate on prices. This is because no physical currencies themselves have to be taken possession of here, but one can trade with exchange rate forecasts.
The Best Forex Brokers for Beginners
Before becoming a Forex trader, it is important to look into the offers of Forex brokers. It is important to pay attention to a few points to be sure that you are dealing with a recommended provider. So let’s review three best options of trading for beginners with their pros, features and services.
GBE Brokers
GBE Brokers is a forex broker that is multi-regulated and even has a branch office in the UK, which you won’t find at most online brokers. The company was founded by Germans and has its headquarters in Cyprus. GBE Brokers is regulated by BaFin (Germany), CySEC (Cyprus) and FCA (UK). Due to its safety and regulations it is a great choice for trading for beginners.
Over 500 different markets can be traded using the globally popular MetaTrader trading platform in version 4 or 5. These include currency pairs, cryptocurrencies, stocks, indices and commodities. The advantage of GBE Brokers is the sensational execution of trades and the transparent fee structure. The spreads and commissions are very low compared to other providers.
According to our experience, GBE Brokers is especially known among experienced traders who are familiar with the characteristics of a reputable Forex broker. Generally, GBE is considered to have good customer support mixed with the best execution for trades and low fees. Traders can start with a minimum deposit of 500€ or in the free demo account. In summary, GBE is the winner in this comparison with most brokers because it offers the best overall package and the most favourable conditions for Forex trading:
The conditions at a glance:
- Regulated and registered by CySEC, FCA and BaFin
- Branch in the UK
- Spreads from 0.0 pips (variable) and 3€ commission per traded 1 lot (special conditions - cheapest broker)
- Over 200 different assets (currencies, cryptocurrencies, stocks, indices, commodities)
- Leverage 1:30 for private traders and 1:400 for professional traders
- High liquidity and best execution for trades
- MetaTrader 4 and 5 as a trading platform
- Institutional service available
- Free Forex demo account and a minimum deposit of 500€
- Professional support and service from the UK with additional courses and guides for trading for beginners
Vantage Markets
Vantage Markets (formerly Vantage FX) is an Australian Forex broker that knows how to meet the demands of its clients. It is a true ECN broker with great liquidity providers. This is also clearly visible on the website. Vantage Markets is regulated in Australia by ASIC and in the Cayman Islands by CIMA. Generally, the broker is one of the safest, as it is also regularly audited by an external auditing firm. Client funds are kept in one of the world’s largest banks and there is also additional liability insurance.
The broker offers very good conditions for Forex trading. The minimum deposit for the standard STP account is only $50. The broker allows similar to other providers in this comparison to give better conditions to larger depositors. Spreads start from 0.0 pips and commission can be pushed up to $3 per completed trade. As a trading platform is the Metatrader in versions 4 and 5, cTrader and TradingView available.
A few compromises must be made here in support of international traders because the support is only available in English. However, the site is translated into many other languages. Vantage Markets is the best forex trading platform where you can get the maximum profit from the markets without any conflict of interest. Due to its good conditions, this broker is better than many other providers:
The conditions at a glance:
- Regulated by ASIC and CIMA
- True ECN spreads from 0.0 pips
- Commission from $3 per completed trade
- More than 55 different currency pairs
- Leverage up to 1:500
- Fast execution and no requotes
- Metatrader 4 and 5, cTrader, TradingView
- VPS server possible
- Free demo account for trading for beginners and a minimum deposit of $50
- Competent support, but only in English (phone, email, chat). There are a lot of translated versions of the website.
Capital.com
Capital.com is another Forex broker from the UK. The company is relatively new and is expanding its client base in the UK and Europe. The broker is FCA (UK) and CySEC (CY) regulated and has the highest security standards. It is a no-dealing desk broker which routes orders directly to the market.
When trading for beginners you can benefit from fast execution and competitive spreads at Capital.com. Depending on the deposit and account model, spreads and commissions can be lower. Spreads start from 0.0 pips and are variable with no commissions. With a minimum deposit of 20€ (by credit card), Capital.com is in the low range. A free demo account is also available.
Despite being headquartered in the UK, international employees work for this company. The company is open and user-friendly. You’re able to get to know Capital.com, you can meet them at the World of Trading in Frankfurt. This point proves the broker is client-orientendent. Support is available 24 hours a week. In addition, there are also webinars or fundamental market forecasts for the next quarters. In summary, it is one of the most solid and reputable trading platforms for beginners.
The conditions at a glance:
- Regulated by the FCA, ASIC and CySEC.
- True no dealing desk spreads from 0.0 pips with no commissions (variable)
- Different account models
- Free demo account
- Minimum deposit of 20€ by credit card
- More than 50 different currency pairs
- Fast execution and no requotes
- Own webtrader platform and mobile app
- High deposit protection
- English support (webinars, analysis and more)
Forex Trading for Beginners. The Basics of Forex Trading
Forex trading or FX trading works based on the estimation in which direction the price of a currency will move. The decisive factor in FX trading is the spread. This is the difference between the buying and selling rates. The difference represents the profit in the end; if the difference increases, the profit is higher, if the difference remains the same or decreases, there is a reduced profit or a loss if the sides are exchanged all at once, i.e. the difference slips into the minus. Even if it may sound simple, in fact it is not. When starting trading a lot of beginners struggle with a variety of options and functions. In addition to lack of knowledge this “trading” will be not successful. That’s why let’s review some ground rules before starting the journey of Fx trading.
The Strategy in Forex Trading - Decisive Factor or Only a Part of the Success?
FX trading is on the one hand about the applied Forex strategy and on the other hand about the question, over which platform is traded in the further consequence at all. Because both parts have an enormous influence on the profit.
It is important to deal with the matter in advance. That is, to become aware of the opportunities and risks that FX trading brings with it. To believe that one forex trade after the other will lead to a profit because you apply any strategy, which was classified as recommendable on the Internet, could very well end fatally. Because:
a) No strategy always leads to success.
b) You should not act on good luck but intensively deal with the matter of Forex trading.
Therefore, it is advisable to compare brokers in advance before trading forex. Because very well the offer, which is put here into the room, may contribute to whether one becomes successful or not. Because the offer includes not only the available currencies but also instruments to reduce the risk or maximise profits.
The Best Broker: What the Forex Trader Must Pay Attention To
There are a few points, which then in the end lead to the fact that one can say, this or that broker may be the absolute number one. But since there are only a few points that can be judged objectively, it may also be an individual assessment of who is the best Forex broker.
Thus, before comparing, it is important to ask yourself what ideas you have or what requirements must be met on the part of the broker, so that you are satisfied.
Because access to forex trading is offered by countless brokers, you do not have to compromise in the end, but can certainly find the best broker for you within the framework of a comparison, so that you can then participate in trading.
In our next paragraph we’ll review the step-by-step guide on how to choose the right broker, which meets all your expectations.
Forex Trading for Beginners. Pro Tips for Beginners
If you want to deal with Forex trading and compare Forex brokers with each other in advance, it is important to answer the question of what is important to you personally. This is the only way to find out which Forex broker can fulfil your expectations and therefore may be your favourite broker. So you should already go by the test or comparison results and reviews of the experts, but also always let your ideas flow in.
Step-by-Step Guide How to Choose the Broker
Firstly, only when you are convinced the Forex broker is regulated, to open an account. No matter how promising trading is advertised at the online broker – if there is no regulation, then one should move Forex trading or FX trading to another platform. The risk of losing money through a non-regulated forex broker because of playing with “wrong cards” here may just be too high.
Secondly, are there any awards? Many Forex brokers score with a variety of awards. If objective bodies have honoured the broker’s performance accordingly, then this may well speak for the Forex broker.
Thirdly, the offer must be examined. Are those currencies available to be able to trade Forex according to one’s ideas? In addition, you should also take a look at the extras – is there a demo account, which risk-reducing instruments are offered and are there other assets?
Fourthly: How is customer service on a trading platform structured? If questions arise in the course of FX trading, you usually want to have them answered as quickly as possible. Tip: Live chats are ideal, but check in advance at what times they are staffed.
Fifth, the testimonials should also be a consideration. Because reports that have already been written by forex traders on the respective brokers, sometimes give quite an early overview of where the strengths and weaknesses of the broker lie.
vDemo Account and Its Importance for Practice
Before focusing on chart patterns or other aspects on your trading platform, it is important to develop a basic understanding of the Forex market. In all likelihood, you will not start a Forex education uninformed, but you still need to ensure that the knowledge you have gained so far is sound.
You need to understand the decentralised structure that makes OTC transactions – over-the-counter trading – possible without supervision by a regulatory body. It is also imperative that the training teaches you how the market works. This includes not only the opening hours but also what opportunities the gigantic daily trading volume the trading platform offers you. Do you know, for example, that even on weekends certain players are active and can trigger drastic price changes through their trading?
Who acts on the foreign exchange market? How is the influence exerted on foreign exchange rates? All these questions have to be answered in a way that is easy to understand. It is not enough to explain fluctuating exchange rates with a general reference to a changed relationship between supply and demand.
Education Is a Key, Especially on the Beginning
Even in the digital age of online trading platforms for beginner, reference books are excellent sources of information and guides for a wide variety of activities. This is especially true for trading with currency pairs because success depends on the acquired knowledge in combination with practical experience. The following article will familiarise you with what we consider to be the 3 best forex books and criteria that should be taken into account when choosing specialised literature.
When choosing, make sure that the author has practical experience in forex trading and proves it in his book. Due to the increasing popularity of trading, countless writers feel called to write specialised books on the subject. However, only reading a Forex book based on real experience, which presents theoretical knowledge in an easily understandable way through your involvement, will get you ahead. From our point of view, it is not enough that the author has a degree in finance. He should have experienced all facets of Fx trading himself and reported about it in his book.
The volume of technical literature is less important than its completeness. Lengthy explanations enriched with technical terms increase the number of pages and thus the sales price – but not necessarily the added value for you as a reader. From our point of view, forex books that get straight to the point and describe it in an easily understandable way make sense. Even if a trading platform offers you educational sources it will be as useful as a book.
Here is a list of the best books to learn to trade:
- 1. Long-Term Secrets to Short-Term Trading, Larry Williams
- 2. The Intelligent Investor, Benjamin Graham
- 3. The Disciplined Trader, Mark Douglas
Conclusion
Forex trading can bring attractive potential profits. This is because one or the other forex trade may well potentially drive up the capital invested with the corresponding development. However, one should never disregard the high risk of loss in trading.
It is important, however, that you take a look at the Forex brokers before the first Forex trade, to get the certainty of choosing the best provider in the end. Because learning trading forex may well be exciting and provide for potential trading success, but only if you have a serious and fair partner at your side. Trading with Forex, if the access is made through a broker to be questioned, may be anything but recommendable.
Therefore: Make a comparison before the first Forex trade and make sure that you are now trading Forex with the best broker.
F.A.Q.
Fx trading can be both rewarding and risky for beginners. It offers the potential for significant profits due to its high liquidity and 24-hour accessibility. However, it also carries substantial risks, and inexperienced traders can easily incur losses. Before diving into a trading platform, beginners should thoroughly educate themselves about the market’s intricacies, trading strategies, risk management, and financial instruments involved.
One advantage for beginners is the availability of demo accounts offered by many brokers. These allow aspiring traders to practise and gain confidence without risking real money. Additionally, there are numerous educational resources, online courses, and trading communities available to help beginners build a strong foundation.
However, it’s crucial to remember that even the best forex trading involves speculation and market fluctuations, and there are no guarantees of profits. Many beginners fall into the trap of unrealistic expectations and excessive risk-taking. To mitigate risks, beginners should start with a small trading account and only risk money they can afford to lose.
Overall, fx trading can be good for beginners if approached with caution, discipline, and a commitment to learning.
Yes, it is possible to trade forex with $100, but it comes with certain limitations and considerations. Forex trading often requires a minimum deposit, which can vary depending on the broker and account type. Some brokers offer “micro” or “nano” accounts that allow traders to open positions with as little as $1 or $10, making it accessible for those with limited funds.
Trading with a small account size like $100, however, can be challenging on a big trading platform. The potential for profits is limited due to the small trading capital, and transaction costs can have a significant impact on overall returns. Additionally, trading with a small account requires strict risk management, as even small losses can have a substantial percentage impact on the account balance.
To make the most of a $100 trading account, traders should focus on low-cost trading strategies, utilise leverage wisely, and avoid excessive risk-taking. It’s essential to be realistic about profit expectations and consider it as an opportunity to gain experience rather than a guaranteed way to get rich quickly.
As a general rule, traders with larger capital have more flexibility and resilience to withstand market fluctuations. If possible, gradually increasing the trading capital through profitable trading or additional deposits may provide a more favourable trading experience.
While some individuals have become wealthy through the best forex trading, it is essential to understand that trading in the forex market involves significant risk and is not a guaranteed path to riches. The forex market is known for its high volatility and complexity, making it challenging to consistently predict price movements and profit from trades.
The idea of getting rich quickly through fx trading is often a misconception that can lead to substantial losses. Many factors influence the market, including economic indicators, geopolitical events, and market sentiment, which makes it inherently unpredictable.
Success in trading forex requires a combination of skill, knowledge, discipline, and risk management. Traders must invest time in learning about technical and fundamental analysis, develop effective trading strategies, and control emotions during trading.
It is crucial to approach trading with a realistic mindset and set achievable goals. While it is possible to make profits and grow one’s trading capital over time, focusing solely on the goal of getting rich quickly can lead to impulsive decisions and financial losses on a trading platform.
In conclusion, while fx trading offers potential profit opportunities, it is not a guaranteed path to wealth and should be approached with caution and a long-term perspective.