Getting started trading forex is relatively straightforward. While there are some differences in opening a traditional stock trading account vs. a FX brokerage account, the overall steps are largely the same.
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Research and select a broker
The first step is to find out which brokers will offer you a foreign exchange trading account. If your existing broker supports FX trading and you have an approved margin agreement, you can skip ahead and begin trading. If not, you’ll want to look at FX brokers and compare them in terms of platform capabilities, regulatory…
Research currencies and identify trading opportunities
Once the account is open and funded, forex traders typically choose the currency pairs they want to trade, then utilize technical analysis to determine their timing points and price levels for trade entry and exit. Like all markets, but especially leveraged markets like foreign exchange, trade size and trade management are very important to achieve…
Verify your identity
Your broker will confirm your identity through your passport, license, or national ID. A copy of a utility bill or bank statement will also assist with verifying your address. The broker requests the financial and tax information to comply with U.S. government laws and Commodity Futures Trading Commission (CFTC) rules. Once your account and margin agreements have…
Size up your first forex trade
Before making their first FX trade, every trader needs to understand how much capital they have, as well as the specific leverage available to them for their chosen currency pair. Since leverage in forex trading can be as high as 50:1, it is critical to understand how much capital you will have at risk on…
Open a forex trading account
To open an account, you need to provide personal information, including name, address, and tax ID number, and some financial background information. You will also have to answer some questions about your finances and investment goals as part of “know your client” compliance. When you open a FX trading account, it will include the execution…
Monitor and manage your position
Once the position has been established, the trader should have a clear understanding of their position and, through their research prior to trading, have clear exit points for either taking profits or taking a loss on their trade. Many traders will use a one-cancels-the-other (OCO) so that they will automatically take their profit or loss should either…