5 Tips on How to Do Forex Trading from Home
With just a few mouse clicks, you can buy or sell currency online. And believe it or not, the process is really simple once you have everything set up correctly.
Forex trading is very popular with traders who prefer to trade in their own time and don’t want to sit in traffic on the way to work every day. If this sounds like you, then take note of the following points.
- The first step is to make sure you have the right equipment. There are two ways to do this; either start out small or invest big from day one. The first option will involve using a free demo account until you feel confident enough about your expertise and knowledge (which can take months). When you feel like it is time to trade with real money, open an account with a reputable online broker.
The second option involves investing in expensive computer equipment so that you can have access to your trading tools anytime. This might seem like the way to go, but unless you are an experienced trader or you have someone else who can monitor your trades, then you could just as easily lose a lot of money fast.
- Always set yourself a budget to monitor what you are spending – and stick too it! When it comes to trading, this is one of the biggest mistakes people make – not being able to keep track of their cash flow. So if you have $200 in your account and you enter a trade that costs $20, then immediately cut the position. This way you cannot lose more than 20% of your money in one trade.
- 3. Only use the recommended leverage; most Forex brokers offer between 1:50 and 1:500 leverage (that means for every unit of currency you purchase, they will match it with a minimum of 50 units or 500 units). The 1:500 leverage is great if you anticipate a volatile market, but only do this if you really know what you are doing. If not, stick to the 1:50 or 2:1, as long as your broker offers this option.
- Use a free forex analysis tool
Meta Trader 4 is a free platform that offers you the opportunity to get your hands on some powerful tools. For example, if you’re watching EUR/USD and anticipate a rise in price, then why not use the 1 hour / 3 hour / daily charts to see if any support levels could be broken through?
Meta Trader 4 helps you on your way to predicting a break in price, without the need for a large outlay.
- If you are running a demo account until you feel ready to trade with real money, you can still use some of the free forex analysis tools available on the Internet.
MetaTrader is a good place to start. On this site you can use a virtual $10,000 demo account and start exploring the tools that are available to you.